Homeowners on floating rate mortgage loans have powerful and entirely improbable allies helping to keep their monthly loan repayments at record lows.
Take a bow HSBC, Hang Seng, Bank of China and Standard Chartered.
If that sounds like largesse, borrowers beware: it is unlikely to last much longer. Before passing the hat, they should also be warned that vengeance, rather than selfless charity, is in the air.
In the words of modern warfare, homeowners have won a collateral bonus from damage directed at others on the banking battlefield.
The real targets of the big banks, in the present engagement, are smaller lending rivals dependant on money from the wholesale, or 'interbank' money market, to fund their lending.
The gap between the interest rate those smaller players pay to raise these funds, and the interest earned on the resulting loans or investments, is a vital element of their revenues. If circumstances conspire to cap the interest earned on their loans, while the interest paid to raise funds priced off interbank rates begins to rise, the result is a squeeze on net interest margins and hence earnings.
This is the outcome that circumstances have conspired to produce, with a little help from those big banks, as funding costs march upwards but big lenders leave their prime lending rates unaltered.
