The major banks are facing into myriad headwinds: the economy is softening thanks to high inflation, rising interest rates, sagging confidence, low productivity and falling house prices.
Higher rates are typically positive for banks’ earnings, but the benefits from four increases in the official cash rate this year are being diluted by fierce competition for deposits and mortgages, with brokers arranging $8 in every $10 of home lending. Changes to property taxes in the May budget have hit mortgage applications; retail credit growth is sluggish.
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