Margins

Please note that margins over wholesale rates (BBSW) have been creeping down since February. For instance margins of close to 200 over 90 day BBSW were evident from December through to Feb but are now lurking around 130 / 140 over. This means that despite two tightenings in the cash rate 90 day term deposit rates in many cases are now lower. It's quite possible that this will continue (there's still a long way to go to return to pre-GFC margins of about -10) so any opportunities to lock in good margins for longer terms, either through longer fixed term deposits or floating term deposits should be seriously considered. Added to this we believe the one year part of the curve still presents excellent value give the RBA may pause for a while at 4.50% or 4.25% cash rate.