Cash Rate Down v Cost of funding Up

[buzzlightyear]

In the context of the Its like deja vous again thread and on the assumption that the cost of bank funds are increasing and that the RBA will see merit to reduce the cash rate whether Feb or March, what do people believe the net-effect will be on mortgage interest rates?

If RBA reduces .25%, will borrowers see anything? Will the RBA accept the funding cost increase and adjust their rate reduction accordingly ie reduce by 0.5% knowing the banks will not pass on the complete amount, giving breathing room to reduce rate but giving a 'free kick' to the banks at the same time?

And will savers have their rates reduced by more or less than .25%?

 

[Rolf Latham]

Hiya

Depends on the lenders' funding sources, commercial considerations and what margins they want to make on that business.

I can see some out of step and out of cycle movements against the trend from some lenders.

ta
rolf

 

[buzzlightyear]

Moody's punishes BOQ rating

 

[Token Funder]

In the context of the Its like deja vous again thread and on the assumption that the cost of bank funds are increasing and that the RBA will see merit to reduce the cash rate whether Feb or March, what do people believe the net-effect will be on mortgage interest rates?

If RBA reduces .25%, will borrowers see anything? Will the RBA accept the funding cost increase and adjust their rate reduction accordingly ie reduce by 0.5% knowing the banks will not pass on the complete amount, giving breathing room to reduce rate but giving a 'free kick' to the banks at the same time?

And will savers have their rates reduced by more or less than .25%?

Based on recent developments, my view would be that unless the RBA moves down, the Banks will move up.

 

[Ms Jade]

I don't expect the RBA to move down any more than 0.25% at a time. When they do, the majors will probably move down a smaller amount (0.10%?) and keep the rest. They will say it's the absolute max they can move, and then the following month when they pass on nothing it will be less surprising.

 

[jonmardell]

i would expect ANZ and CBA to not pass on the full cut if it happens as they have been the most vocal in recent times regarding cost of funds increasing.

 

[sundance]

Japanese Banks entering the Australian home loan market

What do you think about the comments that Japanese banks might enter the Australian residential loan market?

 

[roger horton]

What do you think about the comments that Japanese banks might enter the Australian residential loan market?

as advised on another posting, exchange rate risk will add to their costs, and they would not likely have to undercut current bank's rates by too much in order to gain a decent market share. Mark Bouros of Yellow Brick Road estimates they couls take up to 10% of the overall market.