Familiar cure for bank hangover
“The trouble is people generally don’t want to borrow and banks in many countries don’t want to lend.”
He said the IMF was forecasting that outstanding loans by European banks will drop by 7% by the end of the year.
“In New Zealand, banks are finding funding not to be a big issue offshore and because people domestically are saving more, the domestic funding situation is better as well. As a result and because profitability in the banking sector is strong, there is a growing willingness to loosen the lending string and get more sales."
He said this was manifesting in an easing of lending terms and temporarily low interest rates. “The very low interest rates being offered as specials for short fixed terms are aimed at winning business while not initiating a 2004-like permanent cutting of fixed lending margins.”
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