Banks are cutting interest rates on deposits faster than mortgage rates because it helps them maintain their profit margins. When interest rates rise, banks typically increase the rates they charge on loans, like mortgages, but they are slower to increase the rates they pay on deposits. This is because they can pass on higher borrowing costs to new borrowers more quickly than they can raise rates for existing savers. Additionally, banks often have a captive audience for their deposit accounts, meaning customers may be less likely to switch banks for a slightly higher interest rate. This allows banks to offer lower deposit rates while still attracting funds, thus improving their profitability.
Banks are cutting interest rates on deposits faster than mortgage rates because it helps them maintain their profit margins. When interest rates rise, banks typically increase the rates they charge on loans, like mortgages, but they are slower to increase the rates they pay on deposits. This is because they can pass on higher borrowing costs to new borrowers more quickly than they can raise rates for existing savers. Additionally, banks often have a captive audience for their deposit accounts, meaning customers may be less likely to switch banks for a slightly higher interest rate. This allows banks to offer lower deposit rates while still attracting funds, thus improving their profitability.
Lukáš Kovanda (Trinity Bank)
