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No risk profit on 3 yr fixed rates?

Discussion in 'Finance & Banking' started by try anything once, 27th Apr, 2009.

  1. try anything once

    try anything once Well-Known Member

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    melb
    I noticed in the paper this morning that it is possible to borrow money on a 3 yr fixed rate from Bank A and put it into a 3 yr term deposit at Bank B and actually make a profit!

    Obviously I would not do it as the margin is slim and the borrowings would require equity tied up as collateral, but it is interesting to see that it is possible - I don't recall ever seeing that before....
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    You'd also need to check fees - not just "headline" interest rates ... but I'm sure some form of arbitrage on interest rates is quite possible.
     
  3. AsxBroker

    AsxBroker Well-Known Member

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    Hi TAO,

    This is right. Even an investment "bank" which doesn't have a banking license is offering 6% for 12 months as they need to give something extra as they aren't covered with the government guarantee. While the banks are increasing their fixed rate loans there may still be some RBA drops between now and the end of the year.

    Cheers,

    Dan
     
  4. Billv

    Billv Getting there

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    And ofcourse you'll pay tax on the small profit but it's an interesting thought...