expansion in household deposits, which rose to $206.2b in July this year, from $181.7 billion in July 2019. This means that banks do not have to compete for savers’ money under the current circumstances. “There’s no pressure to raise rates to attract more – where else are you going to put your money?” Eaqub pointed out.
On the other hand, with new loan-to-value restrictions, banks have also become more cautious about lending, which shows that lenders will not have to raise a lot of new funding.
Nevertheless, Eaqub is of the view that with interest rates set to normalise over the next year, returns offered on deposits will also continue to improve. “Wholesale funding costs will increase and there will be more competition coming on from other savings products. We haven’t seen that yet,” he noted.
