Well in the last 24 hours fixed rates have started to tumble with first Westpac and today CBA.  However the great news is one of the best and most conservative non-bank lenders, Heritage Building Society announced a 0.53 per cent reduction in what was already a reasonably competitive 3 year rate down to 8.75%.

Now no one is suggesting everyone should rush out and fix but we have to admit the trend is very promising.  The down side is that contrary to the Gang of Fours bleating that costs continue to rise, the reality is obvious that pressure is coming off the lenders cost of funds. So while NAB, ANZ and few others have made some massive blunders elsewhere for them the only way to keep shareholders happy is to screw borrowers and/or brokers.  This will probably mean that CBA and Westpac will be able to use their windfall broker commission cuts - which may I remind you were made on the strength of 'cost of funds' for some special deals. 

The next hurdle is split pricing, will the majors have a serious stab at giving branches better deals to offer than they do through brokers. Bankwest have shown their hand and I expect their new broker originated business to fall to near zero and hopefully brokers will ensure it stays that way.  The 'Gang" must have been so tempted to join in and stick what could be a fatal knife into the broker network.  It's probably only the disparity between the 'Gang' members profitability that kerbed a united final attack, or were they waiting for the non-banks to run up the white flag first.

One has to hope that if this rate drop is in fact a change of wind, that the 'Gang' have left their run too late for a fatal split pricing lunge and the good guys like Heritage and AMP  (and lesser good guys like ING) can apply enough pressure and rally enough broker support to 'keep the bastards honest'.