Interest Rates

[Aussiejeff]

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?

Yeah. On ABC last night there was a fair bit on how the Big 4 are giving small businesses the cold shoulder. Investment loans from the Big 4 for the 100's of 1,000's of small businesses are as rare as hens teeth ATM.

SupaKRudd should set a deadline on removing the bank deposit guarantees for end of June if the ba$tid$ won't lend to small business.

Then lend directly to small businesses from KRuddBank from 1 July, bypassing the 4 Ba$tid Bwank$. *GASP*

Imagine what the Big 4 bullyboys would do then, with a 5th Pillar Bwank to compete with!!

*$HLOCK - HORRORRR!!*



Of course, I'm only dreaming....

 

[glads262]

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?

The banks don't increase rates due to increased demand.
They have been more selective in approving borrowing at the moment - you cannot get a loan with a greater than 95% LVR at the moment - and only if you have a proven savings history.

Ruddbank to small business?? This is Chinese style communist banking. If the banks are not willing to take the risk lending to some of these small businesses, then why should the government?? This just sets up a book of government loans which have a much higher probability of going bad.

Its the same with commercial property. If a development is too high risk, then it should not be funded.

 

[MR.]

I can feel double digit interest rates in my bones in the next two years.

Appears to be swinging that way.

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.

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.

It's hit the fan in October and everything changed.

The CPI in OCT NOV and DEC 08 was -0.3%.
The following 1/4 JAN, FEB and MARCH 09 WAS +0.1%

So for the past 6 months there has been negative inflation (-0.2%)
and interest rates on deposits are now 3%.
Still makin money there. But not as much as some. Ol well........

 

[jono1887]

Looks like rates are back on their way up, even if the RBA isnt planning in increasing the overnight cash rate.

http://www.brokernews.com.au/contents/news/cba-under-fire-as-it-pushes-up-rates/35574

 

[Soft Dough]

Yeah. On ABC last night there was a fair bit on how the Big 4 are giving small businesses the cold shoulder. Investment loans from the Big 4 for the 100's of 1,000's of small businesses are as rare as hens teeth ATM.

Well it was Rudd and Swann and their stupidity which has lead to businesses finding it hard to borrow, on a few fronts.

1. Talking down interest rates on homeloans makes banks recoup their margin from businesses. <- massive mistake for growth, but sure as heck wins votes.

2. Implementing policies to keep gearing high in the bubble of the housing market, removing funding from businesses and putting it into unproductive assets. <- massive mistake for growth, but sure as heck wins votes.

3. Stuffing up Industrial relation laws, making businesses less competitive / profitable. <- massive mistake for growth, but sure as heck wins votes.

4. Giving money to people to buy Plasma TVs and to gear into property instead of directing it to business initiatives to keep the people employed, and provide revenue for the country in the future. <- massive mistake for growth, but sure as heck wins votes.


I am getting the feeling that the management of this government is to win votes rather than to improve the country.

But then again why do I care..... I am against majority of people who own their homes, want a plasma and think that work choices was a bad thing.

Typical in their short-term, self focused viewpoints. Hypocrits, whingers and economically uneducated, the pollies and the voters.

 

[Smurf1976]

But then again why do I care..... I am against majority of people who own their homes, want a plasma and think that work choices was a bad thing.

Those who own their own homes wouldn't be too worried about interest rates unless they've got a loan for something else. It's those who have a mortgage that will be more concerned about it.

Always makes me laugh when I hear something about "rising interest rates affecting home owners". Sadly, we've become a society where many think that having a mortgage means they "own" the house. Nope - the bank owns some, you own some and you're hoping to buy it via a large number of monthly / fortnightly / weekly payments. But you don't own it now. Try missing a few payments and this reality will hit rather hard.

For the record, the bank owns my house. In other words, I've got a mortgage - one that I'm paying off as fast as I can.

 

[Julia]

Another typically populist gesture today from Rudd and Swan, rushing to the airwaves when the CBA raised rates, protesting their outrage at the move.

Presumably they figure it will persuade the electorate that the kind government is all on their side against the nasty big banks.

But oh how they do love to trumpet the profitability of our banks when swanning about on the world stage.

What hypocrisy!

 

[Trevor_S]

I am getting the feeling that the management of this government is to win votes rather than to improve the country.

How is that different to any other Government ? The only time anything decent happens is if occasionally, serendipitously both those two happen together ie win votes and country improves.

I don't blame the Government, it's like blaming a cat for wandering into your yard, that's what cats do, it's the idiot owner that is the true villain... the blame lies squarely with the nut jobs that put them in power

But then again why do I care..... I am against majority of people who own their homes, want a plasma and think that work choices was a bad thing.

Well I care I own my own home and an IP (as in I have no mortgages) and I was only against Workchoices because it was overly complicated (1000 pages long) not for any stupid reasons espoused by Union or Labour party apparatchik and don't have a TV at all Employees had it good under Workchoices. I was audited 3 times ! including one field audit (passed all 3) under workchoices. This NEVER happened in the previous 14 years as a business owner/employer. Between this federal labour Government and the doofus state labour Government and their changes to employment laws (and the plethora of other red tape), I have had enough and started to sell my various businesses. Hopefully an over eager Gen Y'er or a recently made redundant Gen X'er will be keen to buy the rest (in bits)

 

[noirua]

The UK is in an increasingly bad state and only looking marginally acceptable due to the rest of Europe doing very badly.
UK annual inflation has hit 5.3% with the Bank of England's minimum lending rate set at 0.5%.

House prices are starting to accellerate upwards.

There is a nasty smell of burnt brake linings as the Bank of England tries to push the economy forward whilst standing on the interest rate brake.

The £ is falling steadily against the US Dollar. Down from US$2.05 to US$1.43 to the £1. This will increase the costs of imports, though exports are at last improving.

The Government consists of Conservatives wanting to get on with cutting the deficit whilst it's known the LibDems real agenda is quite different; though they are forced to tolerate the position for 5 years.

Strong rumours that the V.A.T. rate will go up to 20% from 17.5% shortly, thus accellerating inflation. Taxes are expected to rise sharply next year.

Europe as a whole are basically in a pickle. UK deficit is about £1.5 trillion with total debt nearer £3 trillion. Maybe high inflation is a plan to cut the value of the deficit.

 

[trainspotter]

Sums it up really. Too fast, too quick and they have overcooked it.

THE Australian dollar closed lower after the Reserve Bank of Australia (RBA) indicated it might keep its benchmark interest rate on hold for the forseeable future.

At 1700 AEST, the Australian dollar was trading at $US0.8766/68, down slightly from its close of $US0.8773/76 on Monday.

Since 0700 AEST on Monday, the local unit traded between $US0.8780 and $US0.8703.

During the domestic session, the RBA hinted it might not lift the cash rate again for some time.

In the minutes of its May 4 board meeting, the central bank said its decision to raise the cash rate 25 basis points to 4.5 per cent "would leave monetary policy well placed for the present''.

Commonwealth Bank associate economist Sara Hoenig said currency traders interpreted the comment to mean the RBA had reached a pause in its rate hike cycle.

 

[drsmith]

At 1700 AEST, the Australian dollar was trading at $US0.8766/68, down slightly from its close of $US0.8773/76 on Monday.

It's now close to $US0.84.

 

[Wysiwyg]

Rates kept at 4.25%. Forecast was correct for the last 12 months (4.00% this month) yet different this time. Lost $76 so kind of grinning this time that I got tagged for such a small amount.

 

[joea]

Hi.
The interest rate remains the same.
In 12 minutes the AU$ moved from 107.06 to 107.92.
I am wondering if a "rates merven" can explain why the government is allowing the high Australian dollar wound our export side of the economy.?
I realize the high australian dollar means a safe haven for investment in this country.
(or think I do)
What is the benefit of the high dollar to politics?

Its just that I always thought it would be more beneficial down around 98-99 cents.
joea

 

[pixel]

Hi.
The interest rate remains the same.
In 12 minutes the AU$ moved from 107.06 to 107.92.
I am wondering if a "rates merven" can explain why the government is allowing the high Australian dollar wound our export side of the economy.?
I realize the high australian dollar means a safe haven for investment in this country.
(or think I do)
What is the benefit of the high dollar to politics?

Its just that I always thought it would be more beneficial down around 98-99 cents.
joea

I'm not a "rates merven" (or did you mean Merlin? I'm not he either ).
But I'll try and add my in reply:

A higher AUD makes imports cheaper, thus helping our retailers. Or so it seems.
Given that our Gov'mint seems to hold the opinion that Miners have it far too easy and must be punished with more taxes, concern for exporters doesn't seem to enter the field. But every cent that the AUD gains on the USD adds abut 1% to Harvey Norman's profit margin. And Dick Smith's. And JB Hifi's, David Jones', ... you get the drift.

It makes it also somewhat more expensive for "Overseas Interests" to buy Australian farms. businesses, and other assets.

 

[Calliope]

I'm not a "rates merven" (or did you mean Merlin? I'm not he either ).

I think joea may be referring to "Mervyn" King, Governor of the Bank of England. Otherwise I am intrigued.

The Bank said that it would leave its official rate at its historic low of 0.5 per cent for the 32nd month in a row. Traders are now betting that the rate will not rise until 2013.

http://www.theaustralian.com.au/new...f-looming-crisis/story-e6frg6so-1226160958874

 

[sptrawler]

I think the RBA is just taking the opportunity, to squeeze the gonads and drop the ones who are too geared.
Just a great situation for the RBA, plenty of money around, no one is spending it.
Sorts out our overpriced retail sector, sorts out banks throwing money around like it is confetti, sorts out real estate ponzi schemes.
Ayone can make money selling crap to people who are just borrowing more and more.
It is a long overdue reality check, we were just lucky the U.S and Europe had a crash we could watch. We were only one step behind them.
I think the RBA is doing a great job, with no help from the goon show.
Interest rates will go up before they go down IMO.

 

[Smurf1976]

What is the benefit of the high dollar to politics?

High dollar = some people lose their jobs but far more gain from cheap overseas holidays and cheaper petrol, the latter being a highly politically sensitive issue.

Long term, I can't see it doing the country any good whatsoever. But cheap petrol buys votes, people generally seem to think of a high dollar being a good thing, and it also buys cheap overseas holidays. All of that is good news if you're trying to get re-elected.

I saw a statistic about the number of Australians holidaying overseas recently. I don't recall the exact figure, but somewhere not far short of a million Aussies went to the USA last year. 1 million, just to the USA. There's a lot of votes to be lost if the AUD falls.

 

[Eager]

I saw a statistic about the number of Australians holidaying overseas recently. I don't recall the exact figure, but somewhere not far short of a million Aussies went to the USA last year. 1 million, just to the USA. There's a lot of votes to be lost if the AUD falls.

Maybe they got sent there for punishment.

I'm a little intrigued by the whole issue of the supposed benefit to the economy by cutting interest rates to mortgagees. The theory is that more money will be put into people's pockets and that they will spend it, helping the retail sector and some local manufacturers to the domestic market. The last two interest cuts were largely ineffective in that regard, and what is often ignored is the fact that it is only a minority of people in this country that have a home loan. When the interest rate is cut, the majority of people do not benefit, it seems.

How could it be done better?

 

[sptrawler]

If they drop interest rates and get people to spend money to support the shops, which are charging stupid prices to support their stupid rents and stupid car leases and stupid mortages.
How does that change anything, it just perpetuates the underlying problem that has grown over the last 30 years.
Also that is only one section of the economy, I think if the opportunity presents they will try and adjust other areas

 

[joea]

Sorry people the heat is getting to me. spelt it wrong.

"Maven" is a trusted expert in his field who seek to pass knowledge on to others.

Thanks for the answers! I am aware by reducing them too quickly it does not solve the complete problem.
However a number of economist statistics are use to gauge a move in interest rates.
Inflation, gross domestic product, the level of the Australian dollar, international interest rates(particular US), unemployment, housing starts, car registrations, retail sales, wages, fiscal policy and taxes and competition policy.

So with a two speed economy, where one is starving and the other lighting their cigars with $10 dollar notes, I was wondering when the RBA was going to come up with an explanation that I could believe.

The government sets the monetary policy, while the RBA enacts the mechanical aspects of the policy to make the change to rates.

HOWEVER if some of the indicators are not completely correct(or twisted) we have a problem.
i.e. equating part time jobs with full time jobs.
cash for clunkers to get more new cars on the road etc.(people go into more debt)

Anyway I thank you all. I have just been wondering how we get more cylinders working on the "engine" we call the economy. I KNOW IT'S NOT WAYNE SWAN. and i do not think Peter Costello is coming back.
joea