100 basis points RBA cut
- Thread starter plusnq
- Start date
Bet they all drop interest on deposits 1% 
Good news and thanks to Glenn Stevens for making the right decision IMHO.
The urgency now is for the IR setting to take account of priorities from the global village perspective. That sub prime mess in America still has not bedded down, neither in Europe and the contagion is spreading to China and undermine demand for commodities and the basis of Australian prosperity. RBA's thinking is that 1% IR cut is now required to head off the looming prospects of recession in Aust and increase cash liquidity to lenders to offset costs increases from overseas borrowings.
The 0.8% interest rate cut passed by most lenders to mortgagors will help to boost investments in the anemic property market. Let's hope there will be more to follow as a contribution to world growth.
The urgency now is for the IR setting to take account of priorities from the global village perspective. That sub prime mess in America still has not bedded down, neither in Europe and the contagion is spreading to China and undermine demand for commodities and the basis of Australian prosperity. RBA's thinking is that 1% IR cut is now required to head off the looming prospects of recession in Aust and increase cash liquidity to lenders to offset costs increases from overseas borrowings.
The 0.8% interest rate cut passed by most lenders to mortgagors will help to boost investments in the anemic property market. Let's hope there will be more to follow as a contribution to world growth.
?
I can't believe so many people are seeing this as the start of a market upswing. It (and future rate cuts) will hopefully minimise asset deflation. I would be very happy with stagnant prices for the next 2-3 yrs.
Around that time I would imagine
a) Rents and interest costs would be close to parity
b) The financial crisis will have been processed and the economy should again start moving forward
c) There will be a significant shortage of housing due to lack of construction in recession years
Essentially a similar situation to the late 90's
I can't believe so many people are seeing this as the start of a market upswing. It (and future rate cuts) will hopefully minimise asset deflation. I would be very happy with stagnant prices for the next 2-3 yrs.
Around that time I would imagine
a) Rents and interest costs would be close to parity
b) The financial crisis will have been processed and the economy should again start moving forward
c) There will be a significant shortage of housing due to lack of construction in recession years
Essentially a similar situation to the late 90's
Bet they all drop interest on deposits 1%
That will be an interesting one. Mind you the spread between term deposit rates and mortgage IRs has been wafer thin lately. Not sure how they are making much money on that but I guess they haven't had many alternatives.
The banks may well only drop deposit rates .8% - the .8% borrowing drop by the majors seems to be mainly targeted at taking out the second tier lenders who will have difficulty following that lead (although St George are keeping up but they're almost a "major"). The weakness of the second tier lenders in both deposit and lending rates (as well as perceived credit risk at the moment) make them good takeover targets. If they do try to keep up it will weaken them significantly, making them easier to purchase.
This is a good strategic move by the banks to reduce long term competition and grow in this market. In the short term it means we are getting some very sharp rates. And in the long term if they try to go back to their old tricks following the reduction in competition, we can only hope some little upstart will see the spread open up and enter the market to keep them honest...
But that can only happen when the securitisation market re-opens - whenever that may be...
The bad old days of banking could well be upon us again sooner than we think... once the "consolidation" of the sector is complete... I must say I generally agree with this prognosis as the most likely scenario. Although properties with high yields already will likely get dragged up in price by the pure rental increases in that timeframe. Other than that low yield properties are most likely to normalise in yield through rent rises and high inflation.
The banks will pass on... nothing or 0.25 at best... they will cut the money market accounts by one full point though...
Just goes to show that predictions are not very accurate whether they be from leading economists or even from somersofters.
If rates continue to drop then CF+ looks like a real possibility in Sydney and elsewhere.
Great news! 1% (100 basis points) with most banks passing 0.8% is fantastic!
Having said that.....the real issue is the underlying cause for such a large cut. I will reserve my further elation till next year...I feel that we are in for some rocky times over the next 12-18ths.
Whilst rates have dropped...I think credit is still tight.
Sash
Having said that.....the real issue is the underlying cause for such a large cut. I will reserve my further elation till next year...I feel that we are in for some rocky times over the next 12-18ths.
Whilst rates have dropped...I think credit is still tight.
Sash
Missed the news so watched the 730 Report on ABC which was interesting with views from Malcolm Turnbull, Paul Keating and Alan Kohler
Alan Kohler talks to 7.30 Report
Alan Kohler talks to 7.30 Report
I'm not a doomer or a gloomer, but I am not feeling that bullish on property at the moment. Why.........job security
Credit is still tight, the US will go into a recession and as a result I think people will hang onto their money and go to ground for a while. Some people on margin in the stock market have been whalloped over the last few months, joe public see's it all going to hell and as a result sentiment suffers.
I just heard on CNN about job losses in the financial and retail sectors in London and the numbers were in the tens of thousands. People will hear this and be gripped by fear and not spend.
Many people are also worried about their money in the bank and perceive that they could lose it at any moment. Remember, perception IS reality.
Fuel prices will be interesting to watch, as oil climbs back into the 100's and the Australian dollar goes lower. It will be interesting to keep an eye on fuel prices and also retail spending in the lead up to Christmas.
But I think it is a time for opportunity, choose your areas, watch them like a hawk and move when you see something with good fundamentals. As the difference between rent money and mortgage repayments shrinks, then we will see the tipping point.........The Whyte Hypothesis
Credit is still tight, the US will go into a recession and as a result I think people will hang onto their money and go to ground for a while. Some people on margin in the stock market have been whalloped over the last few months, joe public see's it all going to hell and as a result sentiment suffers.
I just heard on CNN about job losses in the financial and retail sectors in London and the numbers were in the tens of thousands. People will hear this and be gripped by fear and not spend.
Many people are also worried about their money in the bank and perceive that they could lose it at any moment. Remember, perception IS reality.
Fuel prices will be interesting to watch, as oil climbs back into the 100's and the Australian dollar goes lower. It will be interesting to keep an eye on fuel prices and also retail spending in the lead up to Christmas.
But I think it is a time for opportunity, choose your areas, watch them like a hawk and move when you see something with good fundamentals. As the difference between rent money and mortgage repayments shrinks, then we will see the tipping point.........The Whyte Hypothesis
