Does anyone know if it is interest rate rises or cuts (or both) that Banks profit from?
One article I read stated that Australian banks make $25 million a day on the average difference in the cash rate verses cash deposit rates (I have never known cash deposist (transaction accounts) rates to increase in line with a rise in the official cash rate. Simarily Banks make a killing on cash while we WAIT for our cheques to "clear".
I question if banks may stand to make alot in the way of fees as people start to lock into fixed rate loans (and are forced to pay break fee's on the existing loan.)
I think it was in Shares that I read that historically banks have continued to make increasing profits in the event of rate rises and the softning of the housing market.