Maybe the RBA wants the banks to increase their rates?

[sptrawler]

Who says the R.B.A don't want the banks to lift rates? Wayne Swann.LOL, LOL
If the R.B.A thinks the interest rates are low enough to curtail inflation, yet want more pressure put on the retail sector. What better way than having the banks lift their rates, it has the added benefit of improving the banks capital adequacy ratio.
Which will enable them to meet the basel 111 liquidity, it appears to be a no brainer to me and Swann is being a 'dick' as usual. trying to get cheap votes.
Time will tell, hower the last thing the R.B.A wants to see is headlines like this one.

http://smh.domain.com.au/real-estat...-home-sales-trend-upwards-20120206-1r0zy.html

 

[YELNATS]

I have a tricky dilemma on my hands.

I have existing variable rate loans on 2 properties.

I am borrowing a further $1 million to purchase a third property and I am fixing my bank loan (not from ANZ) at 5.99% for 3 years. However, the settlement date is next Friday February 17 and between now and then the bank could increase the fixed rate by up to 25 basis points. However, I can protect the 5.99% rate if I pay the bank a fee of $1500.

I am awaiting ANZ's decision today whether they will lift their rates.

What would you do in these circumstances?

 

[YELNATS]

News just to hand, ANZ raised variable rates by only 6 points.

I think I'll just sit tight, not a lot to worry about.:

 

[sptrawler]

Well the first move is always the hardest. I tend to think the R.B.A will use this as a opportunity to fine tune the economy.
Has to be better than up 6 down 4 ad nauseum.

 

[sptrawler]

It's also funny that they have removed exit fees, but who do you go to. C.B.A and N.A.B were the nasty banks last year. So you jump into A.N.Z and Westpac, pay establishment fees and whallah you are now hit with them putting up there rates.
Good on you Wayne, that fixed the banks, why can't you be honest and say if the banks make a skinny margin, they will go broke and we will go down the toilet.

 

[sptrawler]

This statement by Wayne today sums it up.

"The fact is that the major banks in this country are very profitable. Their net interest margins are back to where they were prior to the global financial crisis.'

"We do need a strong financial system, we do need profitable banks, but what we need here is competition."

What does that mean, it is o.k as long as they all do the same thing.

 

[Starcraftmazter]

It is not even true. The yields banks have had to pay on their covered bond issuances are more or less equal to the interest rates they charge on mortgages. Considering they also have to pay for staff, rents, maintenance, and actually make a profit - the banks are losing money on every new mortgage their write.

This comes in a year where the banks have to refinance the biggest amount of their foreign debts for several years to come or several years back - because all the money the banks borrowed during the GFC with the government's wholesale guarantee is due this year and has to be re-borrowed.

Unless the foreign lending markets improve significantly or our government guarantees their debt again, our banks are headed for a catastrophe as this year progresses. It doesn't even matter that credit growth is flat, unless they can re-finance their GFC borrowings they will have to get rid of a substantial portion of their current assets - and forget about any new lending.


For the record, I truly hope this happens so that Swan looks like the retard he is



As for the RBA, Stevens has been doing a reasonably fine job of slowing deflating the housing bubble. I doubt it can be done for long - and at some point it will violently burst - but for the time being, the RBA is certainly not going to allow speculators to try and re-inflate it - hence their hold on rates and warning to potential home buyers.

 

[Glen48]

The banks are equally guilty as the Fed's lending at 110%, loc doc loans. FHOB , knowing the tax payer will bail them out if all goes pear shape.
So when it all tanks don't feel sorry for them and if you have shares in them good luck with that.

 

[snowking]

The banks are equally guilty as the Fed's lending at 110%, loc doc loans. FHOB , knowing the tax payer will bail them out if all goes pear shape.
So when it all tanks don't feel sorry for them and if you have shares in them good luck with that.

and whilst the banks want to increase interest rates to ensure they arent writing loans at a loss we have a moronic treasurer who calls them 'bastards' for increasing their standard rate by 6 basis points. The last covered bond issue by CBA was done at the BBSW plus 1.7%, they can't continue to lend at current rates whilst borrowing at close to 7%. Wayne Swan needs to be shot for the benefit of the country.

 

[IFocus]

and whilst the banks want to increase interest rates to ensure they arent writing loans at a loss we have a moronic treasurer who calls them 'bastards' for increasing their standard rate by 6 basis points. The last covered bond issue by CBA was done at the BBSW plus 1.7%, they can't continue to lend at current rates whilst borrowing at close to 7%. Wayne Swan needs to be shot for the benefit of the country.

Aaahh how many bil did they make again......what competition forces would you like to nominate in the banking market?

 

[Julia]

Aaahh how many bil did they make again......what competition forces would you like to nominate in the banking market?

If you express the profit of the banks in ROE rather than dollar terms, it's nothing much at all. So deceptive and manipulative to always talk in terms of "the billions the banks make". Wayne Swan, in particular, is guilty of this sort of simplistic, populist nonsense.

The other rant he regularly does along similar lines is to suggest the government 'propped up the banks' during the GFC. The banks, Mr Swan, paid the government handsomely for that government guarantee, something essentially put in place just to ensure public confidence.

 

[sptrawler]

It is not even true. The yields banks have had to pay on their covered bond issuances are more or less equal to the interest rates they charge on mortgages. Considering they also have to pay for staff, rents, maintenance, and actually make a profit - the banks are losing money on every new mortgage their write.

This comes in a year where the banks have to refinance the biggest amount of their foreign debts for several years to come or several years back - because all the money the banks borrowed during the GFC with the government's wholesale guarantee is due this year and has to be re-borrowed.

Unless the foreign lending markets improve significantly or our government guarantees their debt again, our banks are headed for a catastrophe as this year progresses. It doesn't even matter that credit growth is flat, unless they can re-finance their GFC borrowings they will have to get rid of a substantial portion of their current assets - and forget about any new lending.


For the record, I truly hope this happens so that Swan looks like the retard he is



As for the RBA, Stevens has been doing a reasonably fine job of slowing deflating the housing bubble. I doubt it can be done for long - and at some point it will violently burst - but for the time being, the RBA is certainly not going to allow speculators to try and re-inflate it - hence their hold on rates and warning to potential home buyers.

Well put SCM, that is where I was coming from with the thread. The banks still have to be able to attract deposits and make a margin on lending.
I think the reserve bank is doing a terrific job, I think Swan is a 'dick' who would be served better by shutting up and letting people who know what they are doing, get on with the job.
He will be the first to $hit himself if people start jumping all over the place with their mortages. If instability breaks out in our banking sector, we will be all in trouble.

 

[snowking]

If you express the profit of the banks in ROE rather than dollar terms, it's nothing much at all. So deceptive and manipulative to always talk in terms of "the billions the banks make". Wayne Swan, in particular, is guilty of this sort of simplistic, populist nonsense.

The other rant he regularly does along similar lines is to suggest the government 'propped up the banks' during the GFC. The banks, Mr Swan, paid the government handsomely for that government guarantee, something essentially put in place just to ensure public confidence.

Expressing the profits in respect to ROA also highlights that the banks arent as profitable as our treasurer would try and have us believe. The four majors have an average ROA of 0.93% which compares to 1.25% for the five major Canadian banks, It is pointless comparing to European and American banks, which are still down the toilet following the GFC.

On another note. The more Swan gets stuck into the banks and reduces their ability to move interest rates independent of the RBA the less banks will be likely to lend. Surely that will restrict credit growth and result in more job cuts in the banks. Completely opposite of the governments objective to stimulate the economy and keep growth inline with government forecasts

 

[sptrawler]

Also along the same line a lot of super funds use the banks as a cornerstone to their investments.
If they a tied to the R.B.A trying to macro manage spending, the resultant drop in income via lower interest payments and lower dividends, will see an increase in pension welfare payments and lower super balances.
Like everyone is saying, if Swan can't get his head around the big picture, maybe he should just shut up.
When the crap hit the fan the government couldn't do enough to talk up the banks. I for one don't think the banks are in a position where they could take a g.f.c2 or a China slump.
Swan trying to make himself look like he is telling the banks what to do is just confusing the electorate. They are wondering , if he is such an idiot why doesn't he shut up. IMO

 

[Glen48]

Propping up the banks with taxpayer funds and sending a message if you stuff up the feds will support you is not a good way run the country.
Money spent on housing is wasted capital that should be used on business venture's that will create exports and make the country less dependent on China's coat tails.

We need to get rid of the idea housing is bullet proof and the only way to wealth creation.

 

[Klogg]

Propping up the banks with taxpayer funds and sending a message if you stuff up the feds will support you is not a good way run the country.
Money spent on housing is wasted capital that should be used on business venture's that will create exports and make the country less dependent on China's coat tails.

We need to get rid of the idea housing is bullet proof and the only way to wealth creation.

100% agree with you there - the problem is, how do we slowly deflate the housing prices so we don't shoot ourselves in the foot? And once the problem is solved, how do we stop them inflating at prices that we've seen in the last 20years?

And it's beyond me how housing even became such a 'safe' investment class when it usually only returns about 4%! (Sometimes more, but not often)

 

[Starcraftmazter]

100% agree with you there - the problem is, how do we slowly deflate the housing prices so we don't shoot ourselves in the foot?

Impossible I say. Good riddance to bad bubble.

And once the problem is solved, how do we stop them inflating at prices that we've seen in the last 20years?

That part is easy - extensive land, tax and rental reforms. Make it impossible to speculate on property - like in Germany.

Easy for a competent government I forgot to add.

 

[Klogg]

Good riddance to a bad bubble indeed, but if you just pop it, the country is really going to feel the effects...

As for the extensive land solution - there's only so much land within the (for example) Melbourne metropolitan area... How does one ensure that the demand for this doesn't raise prices, regardless of any reforms that are done?
(I'm not sure what's been done in Germany though - some bed-time reading for me)

Finally, the tax and rental reforms you propose are likely to be ignored by government because there's too much at stake for them. They'd lose millions, possibly billions in taxes that are paid through the current structure.

 

[Starcraftmazter]

Good riddance to a bad bubble indeed, but if you just pop it, the country is really going to feel the effects...

Buddy, it's going to happen sooner or later - but the longer we put it off, the worse the effects will be.

As for the extensive land solution - there's only so much land within the (for example) Melbourne metropolitan area... How does one ensure that the demand for this doesn't raise prices, regardless of any reforms that are done?
(I'm not sure what's been done in Germany though - some bed-time reading for me)

Why do you refer to one particular area? It's very simple - let the market do it's job. If people are willing to live in more dense living, then build taller apartment complexes in the CBD. If people are willing to travel further to work, then build houses further outwards. Overall, so long as developers have a right to grab land and develop it very very quickly, demand shocks will never translate through to price rises.

I am also referring to the overall national medials - not the prices in one small confined area.

In Germany, it is constitutionally forbidden for any level of government to block land development, so unlike here, there are no bureaucratic hurdles or backroom deals a developer needs to get through to develop land - they simply go ahead and do it. And there is plenty of housing supply for everyone, of the type that everyone wants, anywhere they want.

Finally, the tax and rental reforms you propose are likely to be ignored by government because there's too much at stake for them. They'd lose millions, possibly billions in taxes that are paid through the current structure.

Yes, those verminous parasites. Of course economically (and not to mention socially) the cost of land and house bubbles far far far exceeds these meagre rents which they collect. But of course, our ****ty governments - all levels and all parties just don't give a damn about our country.

 

[sptrawler]

Finally, the tax and rental reforms you propose are likely to be ignored by government because there's too much at stake for them. They'd lose millions, possibly billions in taxes that are paid through the current structure.

The government loose money on negative gearing, but they feel that is better than loosing their pension if they get thrown out.
They have to stop property speculation, the only way it can be done is by removing the tax advantage. They just have to bite the bullet, so it hurts property speculators.
It didn't seem to bother them who they hurt bringing in the carbon tax.