1 00:00:03,900 --> 00:00:06,300 Sean Aylmer: Welcome to the Fear and Greed Business interview. I'm Sean 2 00:00:06,540 --> 00:00:09,840 Sean Aylmer: Aylmer. The Commonwealth Bank has had an incredible run lately. 3 00:00:09,840 --> 00:00:13,650 Sean Aylmer: It's closing in on becoming a $ 200 billion company, and 4 00:00:13,650 --> 00:00:15,690 Sean Aylmer: a recent surge in it's share price means it's now 5 00:00:15,690 --> 00:00:18,329 Sean Aylmer: more than twice the size of National Australia Bank and 6 00:00:18,329 --> 00:00:21,419 Sean Aylmer: Westpac combined. Mind you, the other big three of the 7 00:00:21,420 --> 00:00:25,890 Sean Aylmer: big four have done pretty well also. So how far 8 00:00:25,890 --> 00:00:28,949 Sean Aylmer: can the banks go? What happens to CBA if interest 9 00:00:28,950 --> 00:00:31,200 Sean Aylmer: rates do start to fall this year? What about the 10 00:00:31,200 --> 00:00:33,958 Sean Aylmer: other banks? Remember, this is general information only and you 11 00:00:33,960 --> 00:00:37,950 Sean Aylmer: should seek professional advice before making investment decisions. Carlos Cacho 12 00:00:37,950 --> 00:00:41,159 Sean Aylmer: is the Bank Analyst at Jarden Australia. He's also Jarden's 13 00:00:41,159 --> 00:00:44,339 Sean Aylmer: Chief Economist, A very, very busy man. Carlos, welcome back 14 00:00:44,340 --> 00:00:45,150 Sean Aylmer: to Fear and Greed. 15 00:00:45,598 --> 00:00:47,400 Carlos Cacho: Thanks for having me, Sean. Always a pleasure. 16 00:00:47,880 --> 00:00:50,010 Sean Aylmer: So we'll get to the Commonwealth Bank in a moment, 17 00:00:50,040 --> 00:00:52,680 Sean Aylmer: but more broadly, what is it about the banks at 18 00:00:52,680 --> 00:00:56,100 Sean Aylmer: the moment that investors like. They certainly have outperformed in 19 00:00:56,100 --> 00:00:57,120 Sean Aylmer: the past a little bit? 20 00:00:58,140 --> 00:01:00,390 Carlos Cacho: Yeah, look, they've had a good run in the year 21 00:01:00,390 --> 00:01:03,990 Carlos Cacho: to date, and really since late October when we saw 22 00:01:04,260 --> 00:01:07,980 Carlos Cacho: the peak in bond yields globally. I think the key 23 00:01:07,980 --> 00:01:11,578 Carlos Cacho: driver of that has been rising expectations of a soft 24 00:01:11,580 --> 00:01:14,819 Carlos Cacho: landing both in the US and Australia. And what that 25 00:01:14,819 --> 00:01:19,500 Carlos Cacho: means for banks is that probably credit losses or effectively the losses 26 00:01:19,500 --> 00:01:22,500 Carlos Cacho: they bear for loans going bad as people can't pay 27 00:01:22,500 --> 00:01:25,679 Carlos Cacho: them, are likely to be smaller than people feared because 28 00:01:25,679 --> 00:01:28,828 Carlos Cacho: the economy is holding up better. And we're now kind of at 29 00:01:28,830 --> 00:01:30,510 Carlos Cacho: the point where we can see the light at the end of the 30 00:01:30,510 --> 00:01:33,360 Carlos Cacho: tunnel in terms of the central banks probably cutting rates 31 00:01:34,110 --> 00:01:38,039 Carlos Cacho: later this year by and large. So generally, while banks 32 00:01:38,039 --> 00:01:40,679 Carlos Cacho: do benefit from higher rates, it obviously creates risks for 33 00:01:40,679 --> 00:01:43,110 Carlos Cacho: them as well. Creates a risk of slowing down the 34 00:01:43,110 --> 00:01:46,139 Carlos Cacho: economy, higher unemployment. So they seem to be in the 35 00:01:46,139 --> 00:01:49,530 Carlos Cacho: sweet spot at the moment of earning more on their 36 00:01:49,530 --> 00:01:53,220 Carlos Cacho: mortgages or on their loans, but not taking losses on 37 00:01:53,220 --> 00:01:55,740 Carlos Cacho: the credit because the economy's holding up better than feared. 38 00:01:56,400 --> 00:01:59,190 Sean Aylmer: Okay. Just on that credit, we talked about the mortgage 39 00:01:59,190 --> 00:02:01,649 Sean Aylmer: cliff last year and the idea that people were shifting 40 00:02:01,650 --> 00:02:05,340 Sean Aylmer: from low fixed rate to higher variable rates. Is it 41 00:02:05,699 --> 00:02:08,280 Sean Aylmer: that didn't happen? Or is it much more than that? 42 00:02:08,280 --> 00:02:11,429 Sean Aylmer: Is it that the economy hasn't tanked therefore businesses can 43 00:02:11,490 --> 00:02:14,880 Sean Aylmer: repay their loans, people can pay their credit cards? So 44 00:02:14,880 --> 00:02:16,859 Sean Aylmer: it's broader than mortgages, I presume. 45 00:02:17,550 --> 00:02:20,429 Carlos Cacho: Yeah, look, it is definitely broader than mortgages and generally 46 00:02:20,429 --> 00:02:22,079 Carlos Cacho: what we see with the banks is that even though 47 00:02:22,079 --> 00:02:26,519 Carlos Cacho: mortgages represent the majority of their loan books, the losses 48 00:02:26,520 --> 00:02:29,820 Carlos Cacho: are more likely to come from the business side. Generally 49 00:02:29,970 --> 00:02:33,870 Carlos Cacho: a mortgage is secured against the property, and even if 50 00:02:33,870 --> 00:02:37,110 Carlos Cacho: someone falls into arrears, they can't make payments, there's still 51 00:02:37,110 --> 00:02:40,199 Carlos Cacho: value there in the property. And so it's quite rare 52 00:02:40,199 --> 00:02:43,380 Carlos Cacho: that we actually see, at least in Australia's case, where 53 00:02:43,380 --> 00:02:46,710 Carlos Cacho: the banks take material losses on the mortgages. At the 54 00:02:46,710 --> 00:02:50,399 Carlos Cacho: moment, the most recent estimates from the RBA have negative 55 00:02:50,400 --> 00:02:54,630 Carlos Cacho: equity. So the instances where the loan is higher than 56 00:02:54,719 --> 00:02:58,288 Carlos Cacho: the value of the property are less than 2% across 57 00:02:58,288 --> 00:03:00,930 Carlos Cacho: Australia, which is the lowest it's been in a long 58 00:03:00,930 --> 00:03:03,090 Carlos Cacho: time. And that makes sense given that the housing market 59 00:03:03,090 --> 00:03:06,810 Carlos Cacho: has made record highs. So it's really about the business 60 00:03:06,810 --> 00:03:09,270 Carlos Cacho: side. And what's happened over the last year is the 61 00:03:09,270 --> 00:03:11,579 Carlos Cacho: economy has just held up a lot better than people 62 00:03:11,580 --> 00:03:16,739 Carlos Cacho: feel. Unemployment is still sub 4% while per capita GDP 63 00:03:16,740 --> 00:03:20,280 Carlos Cacho: is going backwards. That population growth that brings it down 64 00:03:20,280 --> 00:03:23,430 Carlos Cacho: is actually a big positive for businesses, and we do 65 00:03:23,430 --> 00:03:26,190 Carlos Cacho: expect that's going to continue. And so even though there's 66 00:03:26,190 --> 00:03:28,409 Carlos Cacho: a lot of pessimism out there, in aggregate, things are 67 00:03:28,410 --> 00:03:31,349 Carlos Cacho: actually holding up a lot better than people would've expected. 68 00:03:31,349 --> 00:03:33,660 Carlos Cacho: If you told an economist or a bank's analyst two 69 00:03:33,660 --> 00:03:36,359 Carlos Cacho: years ago that the cash rate would be over 4% and 70 00:03:36,359 --> 00:03:38,100 Carlos Cacho: the unemployment rate would still be less than four, I don't 71 00:03:38,310 --> 00:03:39,630 Carlos Cacho: think many people would've believed you. 72 00:03:40,560 --> 00:03:43,260 Sean Aylmer: Okay. Now, you mentioned also about interest rates and what 73 00:03:43,260 --> 00:03:45,450 Sean Aylmer: that means for the banks. So I remember being a 74 00:03:45,750 --> 00:03:48,179 Sean Aylmer: banking writer for the Financial Review, and the idea was 75 00:03:48,179 --> 00:03:51,000 Sean Aylmer: that when rates rose, good for the banks, so it 76 00:03:51,000 --> 00:03:54,119 Sean Aylmer: can increase their net interest margins, effectively their profit margins. 77 00:03:54,570 --> 00:03:57,780 Sean Aylmer: When they fall, bad for the banks. Is that not 78 00:03:57,780 --> 00:03:58,350 Sean Aylmer: the case? 79 00:03:59,040 --> 00:04:01,140 Carlos Cacho: That is the case, and we have seen net interest 80 00:04:01,140 --> 00:04:05,370 Carlos Cacho: margins rise, but it's only to an extent. And initially 81 00:04:05,370 --> 00:04:07,889 Carlos Cacho: during the hiking cycle, it was very positive for banks. 82 00:04:08,280 --> 00:04:12,870 Carlos Cacho: Deposit rates rise slower than mortgage rates have, but over 83 00:04:12,870 --> 00:04:16,500 Carlos Cacho: time what we've seen is the banks have competed really 84 00:04:16,500 --> 00:04:21,389 Carlos Cacho: aggressively on mortgages. We've actually seen a materially smaller increase 85 00:04:21,389 --> 00:04:23,969 Carlos Cacho: in the average mortgage rate compared to the cash rate 86 00:04:23,969 --> 00:04:27,839 Carlos Cacho: because of that competition. We saw about a 50 basis point, 87 00:04:27,839 --> 00:04:32,070 Carlos Cacho: a half percent decrease in new mortgage variable rates relative 88 00:04:32,070 --> 00:04:35,159 Carlos Cacho: to the cash rate since the RBA started hiking. And at 89 00:04:35,160 --> 00:04:37,049 Carlos Cacho: the same time, they've had to pay up more for 90 00:04:37,050 --> 00:04:41,040 Carlos Cacho: deposits as households and businesses have been shopping around. It 91 00:04:41,040 --> 00:04:44,339 Carlos Cacho: is still positive from an earnings or a revenue perspective, 92 00:04:44,610 --> 00:04:46,409 Carlos Cacho: but as I said, it does create risks and that 93 00:04:46,920 --> 00:04:49,020 Carlos Cacho: as people are paying more in their interest, there is a 94 00:04:49,020 --> 00:04:51,839 Carlos Cacho: higher chance that some of them may not be able 95 00:04:51,839 --> 00:04:54,630 Carlos Cacho: to repay their loans and you can see bad debts 96 00:04:54,630 --> 00:04:56,789 Carlos Cacho: rise. At the moment, we haven't seen that. Bad debts 97 00:04:56,790 --> 00:05:01,049 Carlos Cacho: still remain very benign. What I'd say is normalizing, but 98 00:05:01,889 --> 00:05:03,808 Carlos Cacho: they don't look like they're going to elevated levels. And 99 00:05:03,809 --> 00:05:06,839 Carlos Cacho: the key things we're watching there for risks are things 100 00:05:06,839 --> 00:05:11,460 Carlos Cacho: like unemployment, insolvencies, et cetera. And while there has been 101 00:05:11,460 --> 00:05:14,820 Carlos Cacho: some stress, it's mostly been concentrated in areas of the 102 00:05:14,820 --> 00:05:18,120 Carlos Cacho: economy that don't have too much debt, like the construction 103 00:05:18,120 --> 00:05:22,319 Carlos Cacho: sector where, yes, it's been a very challenging environment, but 104 00:05:22,320 --> 00:05:25,230 Carlos Cacho: generally speaking, the banks have been making out okay in 105 00:05:25,230 --> 00:05:29,100 Carlos Cacho: those situations. And unfortunately, it's the suppliers, it's the subcontractors 106 00:05:29,100 --> 00:05:31,950 Carlos Cacho: and it's the home buyers who've been wearing the losses 107 00:05:31,950 --> 00:05:33,240 Carlos Cacho: from these companies going under. 108 00:05:33,779 --> 00:05:35,520 Sean Aylmer: Stay with me, Carlos. We'll be back in a minute. 109 00:05:41,820 --> 00:05:45,420 Sean Aylmer: I'm speaking to Carlos Cacho, Chief Economist and Bank Analyst 110 00:05:45,420 --> 00:05:47,790 Sean Aylmer: at Jarden Australia, and I'm just reminding listeners that this 111 00:05:47,790 --> 00:05:50,610 Sean Aylmer: isn't an investment podcast. You should always seek professional advice. 112 00:05:51,000 --> 00:05:54,150 Sean Aylmer: Now, with that in mind, Commonwealth Bank, that has certainly 113 00:05:54,150 --> 00:05:56,940 Sean Aylmer: been the strongest of the big four. Is there any 114 00:05:56,940 --> 00:06:00,599 Sean Aylmer: particular reason, and I suppose what's thrown me a bit 115 00:06:00,600 --> 00:06:04,169 Sean Aylmer: with the Commonwealth, they haven't been competing as aggressively as 116 00:06:04,170 --> 00:06:07,440 Sean Aylmer: ANZ, for example, in the mortgage market. Why are they 117 00:06:07,440 --> 00:06:10,440 Sean Aylmer: doing so well? Valuation's everything, so maybe now they're a 118 00:06:10,440 --> 00:06:12,750 Sean Aylmer: bit overvalued, I don't know. But the last couple of 119 00:06:12,750 --> 00:06:14,130 Sean Aylmer: months, why have they outperformed? 120 00:06:14,490 --> 00:06:17,099 Carlos Cacho: Look, I think there's probably a few factors. You're right. 121 00:06:17,100 --> 00:06:20,790 Carlos Cacho: CBA has stepped back from mortgage competition for a while. 122 00:06:21,330 --> 00:06:24,419 Carlos Cacho: We saw in June they were the first bank to 123 00:06:24,420 --> 00:06:27,779 Carlos Cacho: announce an end to their cashback. They've increased their front book 124 00:06:27,779 --> 00:06:30,299 Carlos Cacho: mortgage rates, those are the rates for new customers, quite 125 00:06:30,300 --> 00:06:34,078 Carlos Cacho: materially. Since then, we've tracked an over half percentage point 126 00:06:34,080 --> 00:06:37,770 Carlos Cacho: increase across a lot of their rates. In comparison, ANZ is still offering a $2, 127 00:06:37,770 --> 00:06:42,839 Carlos Cacho: 000 cashback. So CBA is not looking to grow shares 128 00:06:42,839 --> 00:06:47,279 Carlos Cacho: aggressively. CBA's focus has been more on maintaining their proprietary 129 00:06:47,339 --> 00:06:50,520 Carlos Cacho: channels. So that's the direct customers that come to the bank, 130 00:06:50,520 --> 00:06:54,238 Carlos Cacho: as opposed to growing through more aggressive expansion in the 131 00:06:54,240 --> 00:06:56,910 Carlos Cacho: broker channel like most of their peers have done. The 132 00:06:56,910 --> 00:06:59,070 Carlos Cacho: view there is that perhaps that might be better for 133 00:06:59,070 --> 00:07:02,188 Carlos Cacho: margins, but it does come at the expense of your 134 00:07:02,190 --> 00:07:06,270 Carlos Cacho: mortgage book. In terms of why CBA has been performing so well, I 135 00:07:06,270 --> 00:07:09,509 Carlos Cacho: think part of it comes down to timing. They're the 136 00:07:09,509 --> 00:07:12,059 Carlos Cacho: only one of the big four banks that actually has 137 00:07:12,059 --> 00:07:14,970 Carlos Cacho: a result in February and pays a dividend in February. 138 00:07:15,000 --> 00:07:18,540 Carlos Cacho: So for anyone who is looking to receive the benefit 139 00:07:18,540 --> 00:07:21,300 Carlos Cacho: of that dividend, you're going to want to own CBA now 140 00:07:21,330 --> 00:07:24,059 Carlos Cacho: and then you've got time to sell CBA and own the other 141 00:07:24,059 --> 00:07:26,370 Carlos Cacho: three banks before it comes time for them to pay 142 00:07:26,370 --> 00:07:29,489 Carlos Cacho: a dividend in May. So that's part of it, particularly 143 00:07:29,490 --> 00:07:33,930 Carlos Cacho: for some retail investors or some income focused investors. The 144 00:07:33,930 --> 00:07:36,390 Carlos Cacho: other factor is that globally, we've seen a rally in 145 00:07:36,390 --> 00:07:41,250 Carlos Cacho: banks. US banks have risen over 20% since October. The 146 00:07:41,250 --> 00:07:43,349 Carlos Cacho: Aussie banks haven't risen quite as much. They've risen about 147 00:07:43,380 --> 00:07:46,080 Carlos Cacho: 15% last time I looked. And so I think there's 148 00:07:46,080 --> 00:07:48,270 Carlos Cacho: probably a bit of a trend where some global investors 149 00:07:48,270 --> 00:07:51,540 Carlos Cacho: are buying the banks and often they might just buy 150 00:07:51,900 --> 00:07:54,960 Carlos Cacho: the largest bank, which is CBA, seen as high quality, 151 00:07:54,960 --> 00:07:57,539 Carlos Cacho: safe, and there's not too much risk there. And then 152 00:07:57,540 --> 00:08:00,839 Carlos Cacho: finally, look, CBA, it's expensive. There's no doubt about that. 153 00:08:00,990 --> 00:08:02,969 Carlos Cacho: It's been expensive for a long time though. I think 154 00:08:03,179 --> 00:08:05,219 Carlos Cacho: if you look back at the history of analyst ratings 155 00:08:05,219 --> 00:08:08,460 Carlos Cacho: and price targets on CBA, it's been an underweight or 156 00:08:08,460 --> 00:08:11,100 Carlos Cacho: sell rating for most analysts for the last couple of 157 00:08:11,100 --> 00:08:13,920 Carlos Cacho: years, with a target price that's probably averaging it out in the 158 00:08:13,920 --> 00:08:18,300 Carlos Cacho: nineties. And it's been trading, before this latest rally, it 159 00:08:18,300 --> 00:08:21,539 Carlos Cacho: was kind of range bound between 95 and 105, and now it's up 160 00:08:21,540 --> 00:08:24,690 Carlos Cacho: to, I think it peaked around 115 or so. So 161 00:08:24,690 --> 00:08:28,800 Carlos Cacho: it is expensive. It's still expensive. It's probably still going 162 00:08:28,800 --> 00:08:31,410 Carlos Cacho: to be expensive in a couple of months time. That 163 00:08:31,410 --> 00:08:35,130 Carlos Cacho: high valuation does create risks, but we don't necessarily see 164 00:08:35,130 --> 00:08:38,218 Carlos Cacho: a clear catalyst that's going to change that near term, 165 00:08:38,849 --> 00:08:42,749 Carlos Cacho: unless we see a bigger concern about an economic slowdown, 166 00:08:42,990 --> 00:08:45,958 Carlos Cacho: higher unemployment and bad debts coming back to the fore 167 00:08:46,050 --> 00:08:46,770 Carlos Cacho: for the banks. 168 00:08:47,100 --> 00:08:49,590 Sean Aylmer: Just more broadly, investing in banks, so you've got the 169 00:08:49,590 --> 00:08:51,929 Sean Aylmer: big four, but there could be a lot of change 170 00:08:51,929 --> 00:08:56,459 Sean Aylmer: this year, particularly if we have the ANZ Suncorp Bank decision 171 00:08:56,520 --> 00:08:59,309 Sean Aylmer: to come down later on. ANZ is trying to buy 172 00:08:59,309 --> 00:09:01,738 Sean Aylmer: Suncorp Bank. It's been knocked back by the Competition Regulator. They've 173 00:09:01,740 --> 00:09:03,870 Sean Aylmer: appealed that. We'll see what happens there. We have plenty 174 00:09:03,870 --> 00:09:06,900 Sean Aylmer: of neo banks always telling us that they're using AI 175 00:09:06,900 --> 00:09:10,889 Sean Aylmer: and all sorts of things to create stiffer competition. Yet 176 00:09:10,889 --> 00:09:13,738 Sean Aylmer: the big four, they just keep going. They just seem 177 00:09:13,740 --> 00:09:17,789 Sean Aylmer: to be able to have this dominant market position, and 178 00:09:17,789 --> 00:09:21,238 Sean Aylmer: no matter what's thrown at them, they just still are 179 00:09:21,240 --> 00:09:23,220 Sean Aylmer: part, 25% of the market. 180 00:09:24,240 --> 00:09:28,349 Carlos Cacho: Well, the thing with the banking is we all think 181 00:09:28,349 --> 00:09:31,799 Carlos Cacho: about loans, we all think about mortgages. And actually a 182 00:09:31,799 --> 00:09:33,449 Carlos Cacho: lot of the time what's more important is the other 183 00:09:33,450 --> 00:09:36,208 Carlos Cacho: side of the balance sheet, the liability side, which is 184 00:09:36,208 --> 00:09:39,600 Carlos Cacho: your deposits and your funding. And that's where big banks 185 00:09:39,600 --> 00:09:43,590 Carlos Cacho: get their big advantage. If you are a big major bank, not 186 00:09:43,590 --> 00:09:46,320 Carlos Cacho: only do you have bonds that you issue into the 187 00:09:46,320 --> 00:09:49,169 Carlos Cacho: market, term deposits that you get from customers, but you 188 00:09:49,170 --> 00:09:52,500 Carlos Cacho: are also probably the main financial institution for a lot 189 00:09:52,500 --> 00:09:56,670 Carlos Cacho: of households and businesses. CBA likes to talk about, they 190 00:09:56,670 --> 00:10:01,140 Carlos Cacho: call the MFI share, and it's into the thirties, I believe. 191 00:10:01,260 --> 00:10:02,969 Sean Aylmer: So what is MFI? 192 00:10:03,450 --> 00:10:07,289 Carlos Cacho: Main Financial institution. So basically if someone asked you who's 193 00:10:07,290 --> 00:10:09,480 Carlos Cacho: your bank, it's the one you'd point to. It's the 194 00:10:09,480 --> 00:10:12,689 Carlos Cacho: one you have your everyday banking account with, the one 195 00:10:12,690 --> 00:10:15,360 Carlos Cacho: that you leave the money in. If you're a business 196 00:10:15,360 --> 00:10:19,200 Carlos Cacho: where you leave the float that you're going to pay your employees salaries 197 00:10:19,200 --> 00:10:21,599 Carlos Cacho: and pay your expenses out of. And that's really valuable 198 00:10:21,599 --> 00:10:24,900 Carlos Cacho: because that is usually a pretty low rate deposit product 199 00:10:24,900 --> 00:10:27,689 Carlos Cacho: that people use. And so that gives a big tailwind 200 00:10:27,690 --> 00:10:30,150 Carlos Cacho: for the big banks because they get cheap deposits, they 201 00:10:30,150 --> 00:10:32,730 Carlos Cacho: get cheap funding, and what we saw at the bottom 202 00:10:32,730 --> 00:10:36,478 Carlos Cacho: of the rate cycle, in the midst of COVID when interest rates were 203 00:10:36,480 --> 00:10:39,270 Carlos Cacho: at zero, there was a huge amount of competition from 204 00:10:39,270 --> 00:10:42,059 Carlos Cacho: all of these neobanks, all these non- bank lenders, the smaller 205 00:10:42,059 --> 00:10:45,869 Carlos Cacho: lenders, because money was effectively free, funding was very cheap, 206 00:10:46,469 --> 00:10:48,780 Carlos Cacho: and so it was easy for everyone to compete. Now 207 00:10:48,809 --> 00:10:52,530 Carlos Cacho: that funding costs have gone up significantly, those big low 208 00:10:52,530 --> 00:10:55,290 Carlos Cacho: cost deposit bases the major banks have access to, are 209 00:10:55,290 --> 00:10:57,630 Carlos Cacho: worth their weight in gold, quite frankly. And it's now 210 00:10:57,630 --> 00:11:00,509 Carlos Cacho: much harder for some of the smaller lenders to compete. 211 00:11:00,540 --> 00:11:02,430 Carlos Cacho: We've seen some of the likes of, I think it's called Nano 212 00:11:02,940 --> 00:11:06,000 Carlos Cacho: Home Loans. They sold their book to AMP because they 213 00:11:06,000 --> 00:11:08,820 Carlos Cacho: just struggled in that higher funding cost environment. And we 214 00:11:08,820 --> 00:11:11,550 Carlos Cacho: know that some of the non- bank lenders are also 215 00:11:11,550 --> 00:11:13,800 Carlos Cacho: finding it more difficult to compete with the banks. If 216 00:11:13,800 --> 00:11:17,040 Carlos Cacho: you go back two, three years, they were writing mortgages 217 00:11:17,040 --> 00:11:19,049 Carlos Cacho: at more or less the same rate as a major 218 00:11:19,049 --> 00:11:21,478 Carlos Cacho: bank would. Now they're having to charge rates that are 219 00:11:21,480 --> 00:11:24,540 Carlos Cacho: 1 to 2% higher because they just can't make things 220 00:11:24,540 --> 00:11:26,760 Carlos Cacho: stack up if they compete that aggressively. 221 00:11:27,240 --> 00:11:28,980 Sean Aylmer: Carlos, thank you for talking to Fear and Greed. 222 00:11:29,429 --> 00:11:30,390 Carlos Cacho: Thanks for having me, Sean. 223 00:11:30,929 --> 00:11:34,228 Sean Aylmer: That was Carlos Cacho, Chief Economist and Bank Analyst at 224 00:11:34,349 --> 00:11:37,319 Sean Aylmer: Jarden Australia. This is the Fear and Greed Business Interview. 225 00:11:37,320 --> 00:11:39,450 Sean Aylmer: Join us every morning for the full episode of Fear 226 00:11:39,450 --> 00:11:43,500 Sean Aylmer: and Greed, Australia's best business podcast. I'm Sean Aylmer. Enjoy 227 00:11:43,500 --> 00:11:43,860 Sean Aylmer: your day.