Interest Rates

Julia · 19 April 2009

MR. said:
Thinking down the same lines Julia. I am amazed at this rate as well. Went into Suncorp Friday and questioned how the bank was able to make money at providing depositors 6.2%. The reply was "just looking after their customers". (that's a new one) So I went on and pointed out how Suncorp used to have alot of their deposits from overseas depositors and how I thought it appear Suncorp now was very short of funds. Anyway the teller couldn't tell me anymore.

"Just looking after their customers", huh! Yeah, right.

I have been wondering over the past days if they expect inflation sooner rather than later?

Interesting how that 3 year term with the Suncorp over a period of 0.75% drop by the reserve increased Suncorps term deposits by more than 0.75%. Was around 5% then jumped to 6% when the reserve dropped 0.5% then to 6.2% while the reserve dropped a further 0.25%

The Commonwealth over the same period and terms have gone from 5.5% to 5%.

Yes, I moved one TD from CBA to BOQ because a TD of 7.5% would have rolled over to 3.5%!

Largesse said:
is suncorp backed by the govt. AAA guarantee?

as in, are they able to borrow our govt. soverign rating to borrow in the O/S markets?

if not, this could be the reason they are offering such attractive deposit rates, as cost of borrowing is higher for them compared to big 4 banks

Largesse, Suncorp deposits are backed by the government guarantee, but said guarantee comes at two levels - one for the big four, and a less favourable rate for the second tier banks.

It's pretty likely that this is the reason for the smaller banks offering more on retail deposits, further born out by Robots post below re Bank West.

robots said:
hello,

noticed this one reading the paper today:

http://www.bankwest.com.au/Personal/Savings_and_Investment/Regular_Saver/index.aspx

thats a pretty good rate for people who are saving, 6 big ones

thankyou
robots

Sure, but presumably it's a variable rate so they can suck in some new customers and then drop the rate I suppose.

Julia · 20 April 2009

Further to Robots' link re Bank West offering 6%, I notice in today's paper they are offering a rate of 4.99% on "The Bankwest Business Fighting Fund" which appears to be a business loan.

It's obviously a variable rate but the advt offers it for 12 months.

????

Aussiejeff · 20 April 2009

Well, well.

CBA to raise interest rates on fixed mortgage loans by 20-45 basis points on Tuesday.

http://www.thebull.com.au/articles_detail.php?id=2164

LOL

Those lovely low rates didn't last too long eh? Watch the rest follow suit......

Julia · 20 April 2009

Any bets as to whether they'll likewise raise deposit rates?
(Yes, I know I'd have to be joking.)

Amongst a conversation with Suncorp today their representative said the SUN 6.2% td rate for 3 years "represents where they feel interest rates will likely be at that time".

I think it's much more likely that they need to haul in more funds.

tech/a · 20 April 2009

Aussiejeff said:
Well, well.

CBA to raise interest rates on fixed mortgage loans by 20-45 basis points on Tuesday.

http://www.thebull.com.au/articles_detail.php?id=2164

LOL

Those lovely low rates didn't last too long eh? Watch the rest follow suit......

Getting too much business and expecting rates to stay low.

MR. · 20 April 2009

Questioned Suncorp again today at length regarding their 6.2% tds.

Suncorp is about to launch a new advertising campaign. The object is to make known to all that Suncorp is a bank and not a building Society. Appears some potential deposit customers are by passing Suncorp and are just looking at rates of the big 4's.
Suncorp is Australia's 5th largest bank. there ya go....... been dun out of some of the loot...... Lack of funds.

CBA is raising borrowing rates! oooh..... Lack of funds again? Sounds like it...... How do you attract depositors away from other banks? By offering higher interest rates to depositors......... but if we don't raise loan rates we ain't makin profits!!!! Wonder where this could go? then .. Rud bank to the rescue........

Aussiejeff · 21 April 2009

There will be a rapid response to the banks PWNING Ozzies in the rate war, no doubt.

That response will likely be in the form of a week full of *soothing*, *placating*, *over-optimistic* speeches including "statements of excellent Oz economic performance " by those 2 Amigos Swann-ee & Puff-Daddy Stevens.

Believe, brothers & sisters... believe....

Julia · 21 April 2009

MR. said:
Questioned Suncorp again today at length regarding their 6.2% tds.

Suncorp is about to launch a new advertising campaign. The object is to make known to all that Suncorp is a bank and not a building Society. Appears some potential deposit customers are by passing Suncorp and are just looking at rates of the big 4's.
Suncorp is Australia's 5th largest bank. there ya go....... been dun out of some of the loot...... Lack of funds.

It might have something to do with their poor telephone staff. First you get one of those ghastly voice recognition things which never actually recognises anything you say, so repeats the process multiple times. When finally spitting "Operator:" and you get a person, she directs your enquiry to the wrong area. This person on being asked if a SMSF is considered by SUN as a 'business' or 'personal' enquiry insists that said SMSF is a vehicle owned by SUN and what is my account number. Finally she understands request and transfers the call. I ask if e-options flexirate is available to SMSF's and am assured yes. Begin reading the PDS and discover it is not.

Phone back, go through the voice thing again. Eventually get operator.
Explain requirement. Puts me through to 'Wealth Management' purely on the basis that my enquiry is about a SMSF. Ask if td available online. She doesn't know. Goes away for a while. No. Is SMSF classified as business or personal. Doesn't know. Goes away again to ask. Five minutes later, informs me it's business and directs me to IBus Flexirate which will be the perfect solution she says. Find this on the website and interest rate is less than available at BOQ.

I'm reminded of why I don't want anything to do with this company.

CBA is raising borrowing rates! oooh..... Lack of funds again? Sounds like it...... How do you attract depositors away from other banks? By offering higher interest rates to depositors......... but if we don't raise loan rates we ain't makin profits!!!! Wonder where this could go? then .. Rud bank to the rescue........

Ruddbank to the rescue indeed, at least for NAB.
http://business.smh.com.au/business...ank-aid-20090420-acpd.html?sssdmh=dm16.372454

Trevor_S · 21 April 2009

I have a largish sum I am trying to find a home for within my business. At the moment it's parked in ING @ 4.25% (cash management not term deposit) that will revert to 3.5% in July (and then the cash will move back to Rabo Bank @ 4%) I would love to jump on something like the Bankwest 6% rate, even with the conditions attached ) but they all seem to be "personal" only ? not sure why, surely cash is cash, regardless of it's source ?

I have no intention of tying it down to anything longer then a 3 month TD so if anyone knows where business might be able to access deposit rates similar to the teaser rates offered to private depositors, let us know

I did try and get $100,000 in AMP notes but it was obviously well over subscribed as I only got $30K or so off them. (no gov't guarantee of course)

Julia · 21 April 2009

Trevor, I've found BOQ very prepared to negotiate. Might be worth talking to your local manager.

MACCA350 · 21 April 2009

Anyone have any luck negotiating savings interest rates with the bank?
I tried but they would only roll over the account to get their advertised introductory rates......what ever happened to bargaining

cheers

BradK · 21 April 2009

Looks like the pendulum is swinging back in the favour of savers again... must be some rain dance you guys are doing, because I can feel double digit interest rates in my bones in the next two years.

Brad

robots · 21 April 2009

hello,

spoke to BankWest about the 6% IR for the regular saver,

it is a floating rate, goes up & down, but did not go down just recently

this style of account has been around for a while now ie. bonus interest for saving and no withdrawal

great one for savers, although the $500 limit a bit low, only roughly $120/wk, which is nothing these days

thankyou
robots

helicart · 21 April 2009

I've been pondering whether to fix or not for a couple of weeks.

Here's a xls I've been using to stab in the dark.

one wsheet calculates the 5year breakeven variable rate that corresponds to fixing now, in nominal dollars

2nd wsheet calculates same in net present value dollars.

3rd is a whatif where you can change the variable to your heart's content.
I've already done a comparative scenario of Japan like deflation, middle of the road, and inflation.

Nyden · 21 April 2009

robots said:
hello,

spoke to BankWest about the 6% IR for the regular saver,

it is a floating rate, goes up & down, but did not go down just recently

this style of account has been around for a while now ie. bonus interest for saving and no withdrawal

great one for savers, although the $500 limit a bit low, only roughly $120/wk, which is nothing these days

thankyou
robots

Yes, however; this limit is not faced with the Bankwest eSaver account; offering 5%, so long as you make no monthly withdrawels. This is currently the account I'm using.

robots · 21 April 2009

hello,

thanks Nyden, yes will be heading that way

i have a year of tax to save so anything a bonus

thankyou
robots

MrBurns · 22 April 2009

The news says inflation is down so that paves the way for more interest rate cuts...................to benefit who ?

The banks are raising theirs despite the downward trend.

glads262 · 22 April 2009

MrBurns said:
The news says inflation is down so that paves the way for more interest rate cuts...................to benefit who ?

The banks are raising theirs despite the downward trend.

hey Burnsie,
In fact, core & trimmed etc inflation is still around 4%. Far too high. Doubtful that RBA will drop rates much further.

Fixed rates are different to variable. The banks set their fixed rates on money market rates out for 1-5 years. And, these rates are higher than todays rates.

If you have loans, I would seriously look at fixing now. If inflation stays high, and the economy begins to recover, rates could be back at 8% before you know it!!

PS - with all the bank bashing around - think about this one...

In the US, Reserve bank rates have dropped about 5%. their mortgage rate is down about 1%.
So before you complain... just think that it could always be worse.

the Aus banks would need to raise rates/lower term deposit rates by about 1% to earn the same margin they did 5 years ago. Banks margins are at record lows of around 2%. In the US they are around 3/3.5% at the moment.
The reason Aus banks are still making more profit?? much higher volumes, plus no longer discounting application fees/monthly fees.

MrBurns · 22 April 2009

glads262 said:
hey Burnsie,
In fact, core & trimmed etc inflation is still around 4%. Far too high. Doubtful that RBA will drop rates much further.

Fixed rates are different to variable. The banks set their fixed rates on money market rates out for 1-5 years. And, these rates are higher than todays rates.

If you have loans, I would seriously look at fixing now. If inflation stays high, and the economy begins to recover, rates could be back at 8% before you know it!!

PS - with all the bank bashing around - think about this one...

In the US, Reserve bank rates have dropped about 5%. their mortgage rate is down about 1%.
So before you complain... just think that it could always be worse.

the Aus banks would need to raise rates/lower term deposit rates by about 1% to earn the same margin they did 5 years ago. Banks margins are at record lows of around 2%. In the US they are around 3/3.5% at the moment.
The reason Aus banks are still making more profit?? much higher volumes, plus no longer discounting application fees/monthly fees.

I dont have debt but am teetering on property as money in the bank is a waste of time, at the moment however, as a "wait and see" strategy, it's not so bad, just dont want to have to wait forever.

darnsmall · 23 April 2009

Is anyone else other than the government dirty about the banks not passing on the RBA interest rate cuts to their variable home loan customers?
I'd be pretty happy that rates are well under 10%, thats a win isn't it?

I'm wondering why the banks haven't actually raised the rates with the increase in demand for home loans, I would have though this would have pushed rates back up and I would have thought the banks would be having more probs trying to borrow from overseas pushing rates up more...are they getting all the money from RudBank?

Why doesn't RudBank get into loaning to small businesses the other banks won't?

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