Interest Rates

[Largesse]

A number of scenarios:

Hold-Lower-Lower

Hold-Hold-Lower

Hold-Hold-Hold

Lower-Lower-Lower

If the guvna holds this month and strongly indicates that he will lower in coming months where should i move my cash immediatly? financials?

 

[ROE]

hold-hold-hold
Australia need a recession to stop people borrowing and pay off some debt
we been through on a debt boom ... it's pay back time folks.

All those Billion of dollar spent on properties it's all debt money ... now the people lend you the cash want it back

 

[gfresh]

aww.. but I really thought my mcmansion in the outer suburbs that I paid $500k for would double to $1m in 5 years

 

[Temjin]

it's pay back time folks.

... now the people lend you the cash want it back

huh???? I never knew we have to repay our debt back??? I thought those economists from news.com.au told me that spending is the key to a healthy economy. And then the banks also told me that I should borrow as much as possible because it's good for the economy!!!!

 

[Uncle Festivus]

They don't want you to pay it back - they want to write it off then 'create' some more 'IOU's' into the economy, then it all starts over again

 

[pepperoni]

Why would banks cut??? They have their fangs in most of the suckers out there now they just need to bleed them as dry as possible without killing them for 30 years.

 

[ROE]

huh???? I never knew we have to repay our debt back??? I thought those economists from news.com.au told me that spending is the key to a healthy economy. And then the banks also told me that I should borrow as much as possible because it's good for the economy!!!!

No they dont want you to pay it back..they want you to be their slave for the next 30 years and your kids and grand kids born slave bound and work for them to paid off interest only debt

 

[ROE]

aww.. but I really thought my mcmansion in the outer suburbs that I paid $500k for would double to $1m in 5 years

you will get your million the good old argument of supply and demand and we have a supply problem dont we?

if everyone has a million in the bank you probably sold it pretty quick but most people dont have a million in the bank...so they go to the bank themselves and try to get it but banks dont have too much capital these day to hand out
and the guys the banks want to borrow from doesn't feel like lending out either
and if he does he want his 12% to compensate for the risk.

Until such time keep sitting on it for a while and enjoy it

 

[bvbfan]

RBA will be too soft, when they should have gone 50bp in November they were too soft due to the election. Probably would have saved the other two in 2008.

They'll go 25bp in September and wait to see Oct CPI, then perhaps 25bp in November.

Really they should probably go 50bp in September and will allow them to hold off cutting again until at least February after 2 lots of CPI.

 

[YELNATS]

"Mr Evans said high borrowing costs would make a 50 basis point official interest rate cut in September more likely."

www.news.com.au/dailytelegraph/story/0,,24211703-5014099,00.html

If the RBA cuts 50 bps, surely this will mean the retail banks will cut something like 70-80 bps off our mortgages. After all, they added to the RBA's increases on the way up, so they need to add to the RBA decreases on the way down, given that the banking sector is as price-competitive as that industry tells us it is.

 

[Nyden]

"Mr Evans said high borrowing costs would make a 50 basis point official interest rate cut in September more likely."

www.news.com.au/dailytelegraph/story/0,,24211703-5014099,00.html

If the RBA cuts 50 bps, surely this will mean the retail banks will cut something like 70-80 bps off our mortgages. After all, they added to the RBA's increases on the way up, so they need to add to the RBA decreases on the way down, given that the banking sector is as price-competitive as that industry tells us it is.

I've read just the opposite. Banks may not pass on the rate cut at all - or only partially pass it on.

I'm hoping for no rate cuts; I believe Australia needs to deflate after our little boom there; property first

 

[Bushman]

I believe Australia needs to deflate after our little boom there; property first

A-grade commercial property will 'deflate' when vacancy rates and rents per square metre drop ie if we hit a recession. The 'credit crunch' will not deflate A-grade as cash rich private investors will snaffle up the fully let stuff. I mean what does historically low vacancy rates represent to you good folks? This supply crunch will get worse as more projects are shelved. For it to deflate would be dumb.

There is however a strong case for the guff that was being flogged at the same cap rates as A-grade will drop ie your neighbourhood shopping centres, B-grade office and old industrial. With that I do agree.

Housing will drop in the short term due to 'affordability' in the face of a crisis in consumer confidence due to high interest rates and petrol prices. However the underlying trends of full employment and strong immigration means that ressie is a good bet in the long run.

 

[gfresh]

Place your bets

I think RBA will cut 50 basis points. The banks will cut only 30 points, knowing full-well things overseas are still getting nastier and they really need to keep a decent buffer "just in case". Then there will be the biggest load of whining and finger pointing seen for a long time.

 

[CanOz]

Place your bets

I think RBA will cut 50 basis points. The banks will cut only 30 points, knowing full-well things overseas are still getting nastier and they really need to keep a decent buffer "just in case". Then there will be the biggest load of whining and finger pointing seen for a long time.

25 bps cut.

CanOz

 

[Julia]

I'
I'm hoping for no rate cuts;

Me too. I have a term deposit coming up for renewal next month.

 

[CanOz]

Chuck Butler from Everbank had this to say about the RBA decision in his newsletter "The Daily Pfennig":

"The Reserve Bank of Australia (RBA) printed their last meeting minutes, and they revealed what the markets had priced into the A$... A forthcoming rate cut. Probably at the Sept 2nd meeting. The A$ has rebounded a bit, as the markets had begun to price in a 50 BPS rate cut, whereas the meeting minutes point to a 25 BPS rate cut. However, what I read in the minutes tells me that a follow up rate cut of 25 BPS in October is probably in the books."

Cheers,


CanOz

 

[wayneL]

Real rates to go even more negative. Savers screwed again.

 

[nioka]

Me too. I have a term deposit coming up for renewal next month.

I renewed one today and had to take a 25 point cut. The banks are allowing for the drop now according to my info.

 

[Kauri]

you can't beat our top-flight financial journos... they are up and down more often than a huas drawers..

Terry McCrann was the journalist who beat the drum the loudest one month ago when he declared that the RBA would lower rates in September and might even go 50 pips. In today"s newpapers he is saying that the RBA easing cycle that started yesterday "could prove to be the shortest cutting cycle we have seen, in size and number of cuts, and also their time- span."

Cheers
..........Kauri

 

[aleckara]

Real rates to go even more negative. Savers screwed again.

Double whammy in my opinion for the people outside the housing market. They now have less power to save for a deposit, and the interest rate easing will help prices of houses rise, or fall less than they would. In other words the real impact is the -0.25% - housing appreciation effects.

In other words a boon for people sitting on housing wealth, a bad for people just starting out. In theory if houses are capped by affordability then interest rates shouldn't matter as much to people outside the housing market and are actually worse off under interest rates falls. (i.e if interest is high, and property is depreciated accordingly they can save, get in, and the likely way for interest rates is down making them money).

Edit: Forgot to add that it will reduce our dollar making petrol, and imported goods expensive making living costs are bit harder for people not in the market.