Are Local banks really safer?
Is it fair for banks to claim that they are safer from raising interest rates if buyers go with their variable rates home loan just because they are local? Do local banks really have lower cost of lending and therefore will not raise home loan lending rates for variable rate loans as easily as other foreign banks? First and foremost, banks will not tell you how much funding and what is their cost of funds as it is somewhat secret. But you can find some related information in their financial report if they are listed entities So how would we know local banks won’t raise rates? Secondly, there is no guarantee that lower cost translate into lower lending rates, of course higher cost will almost certainly translate into higher lending rates. If the prevailing lending rates have increased, what would stop the banks from raising rates to improve their margins? The only guarantee is competition and a robust market. Many foreign banks have now obtained the QFB status. QFB stands for Qualified
