Fixed rates continue to drop - now it's Westpac

[Nth Brisbanite]

Westpac now have the most competitive 1 year fixed amongst the big 4. Their 3-5 year fixed are now under 8%. Good sign for the future. Article as per news.com.au

WESTPAC will drop its fixed interest rates for both new and existing customers by up to 0.3 percentage points from tomorrow.

Fixed interest home and residential investment loan rates will decline across all terms by between 0.2 percentage and 0.3 percentage points, the bank said.

Its one-year fixed mortgage rate will fall to 8.29 per cent, from 8.59 per cent.

Fixed mortgage rates for three, four and five year terms will be cut by 0.2 percentage points to 7.99 per cent.

Westpac's move comes one week after Reserve Bank of Australia (RBA) governor Glenn Stevens made comments about the decoupling of mortgage interest rate movements from changes in the official cash rate.

Westpac has seen a decline in its short term funding costs measured by the 90 day bank bill rate, enabling the savings to be passed on, a Westpac spokesman said.

"Fixed rate loans are set against the yield curve so as you see declines in short term funding - in the 90 day bank bill rate - you can pass on those savings, which we do. It's something we're continually looking at.''

But overall funding continues to climb as long-term funding can only be renewed at increasingly higher cost, he added.

Westpac has cut interest rates on fixed rate mortgages three times since July. These moves have produced a combined decline of up to 1.3 per cent.

Interest rates for credit cards are still under review, a Westpac spokesman said.

Last Thursday ANZ said it will drop its fixed interest mortgage rates for new customers by up to 0.2 per cent today.

 

[Shadow]

There was a big jump today in the expectation for further official interest rate cuts. Market expectation is 6.5% OCR by the end of this year, and 5.75% by May. The chance of a cut next month is back up to 100% (was 70% on Friday).

http://www.asx.com.au/data/trt/ib_expectation_curve_graph.pdf

 

[boomtown]

Im an IR bear but unless there is some unexpected wave of good news another 0.25 drop is a given for the October meeting.

 

[boz]

After today's bankrupcy af Lehamn and the Deal of BOA to buy Merrill Linch and the trouble coming out in the next few days from US I strongly recommend to fix the mortgage rate, under 8% is a great deal, funding rates for banks can go up like in June-July where bank funding costs where very high.

 

[myla]

hello,

no way boz, its on and those in are going to love it, jun-luly wasnt long ago

thanks
myla

 

[Strannik]

there is no point fixing now, i don't think there will be any increases in rates during this FY, unless something major happens

 

[boz]

there is no point fixing now, i don't think there will be any increases in rates during this FY, unless something major happens

Have you any idea what something major is? in over 15 years I never seen anything major then in the last day in the financial sector, have a read on bloomberg
I highlight you this:

The yield on two-year notes dropped 37 basis points, or 0.37 percentage point, to 1.84 percent as of 9:04 a.m. in London, according to bond broker BGCantor Market Data. The dollar declined to $1.4481, the lowest since Sept. 4, before trading at $1.4302 per euro at 8:30 a.m. in London.

that make me think not much money at all is going to fundings banks today, or if it does would be for a high return (like june-july).
Also you migh want to know the comment from greenspan

Former Federal Reserve Chairman Alan Greenspan said the financial crisis that began with the collapse of the subprime- mortgage market last year ``is probably a once in a century event'' that will lead to the failure of more firms.

we could be at the capitulation point as things are really bad now, but it is a big call, I think variable mortgages are a very big risk and very unluckily to drop that much too compensate for the fixed rates you get this week

 

[Strannik]

last time i checked we were in Australia, not US

Something major would be a WWIII, involving china and US
Since Australia is a friend of USA we would have to stop selling all the resources to China, which will halt our economy since it's driven only by resource boom.

This is what i call major.

Now drop of the exchange rate of 1 cent isn't something i would consider a major event.

 

[boz]

last time i checked we were in Australia, not US

May be million of australians today might think different when the stock market will plunge and they will sell shares. If you think today's plunge on australian financial and banks won't have effect on mortgage rates you are dreaming

 

[myla]

hello,

thats right bro, carnage on the sharemarket as all the "fake" companies are wiped out,

but guess what is left standing around the corner, you got it man, bricks and mortar

it sure will have an affect on IR's, all the way down

thanks
myla

 

[boomtown]

Money-Market Rates More Than Double Amid Global Credit Seizure

By Gavin Finch and Kim-Mai Cutler

Sept. 16 (Bloomberg) -- The cost of borrowing in dollars overnight more than doubled as banks hoarded cash amid speculation more financial institutions will fail.

The overnight dollar rate soared 333 basis points to 6.44 percent today, its biggest jump, according to the British Bankers' Association. Rates climbed yesterday after Lehman Brothers Holdings Inc. succumbed to mounting credit-market losses and filed for bankruptcy.

``The issue going forward is not Freddie, Fannie or Lehman, it's who's next,'' said Padhraic Garvey, head of investment-grade strategy in Amsterdam at ING Bank NV. ``It's all a mess out there, it's unbelievable. It's very tough.''

The difference between the London interbank offered rate for three-month dollar loans and the overnight indexed swap rate, the Libor-OIS spread that measures the availability of funds in the market, widened 11 basis points to 116 basis points, the most since at least December 2001. That compares with an average of 8 basis points in the 12 months to July 31, 2007, before the credit squeeze started.

American International Group Inc.'s debt ratings were downgraded by Standard & Poor's and Moody's Investors Service, threatening the company's efforts to raise emergency funds. The biggest U.S. insurer by assets is seeking $70 billion to $75 billion in loans arranged by Goldman Sachs Group Inc. and JPMorgan Chase & Co. to replenish capital, according to two people familiar with the situation.

The one-week euro rate jumped 7 basis points to 4.49 percent, the EBF said today, the highest level since Dec. 24. It was the biggest increase since July 3.

Cash Injections

The European Central Bank, Bank of England and Swiss National Bank offered financial institutions emergency cash for a second day today as the credit rout threatened to derail markets.

The Frankfurt-based ECB offered 70 billion euros ($100 billion) in a one-day refinancing operation. Fifty-six banks bid for a total of 102.5 billion euros. The Bank of England injected 20 billion pounds ($36 billion). The SNB also said it will offer overnight cash.

Financial institutions have posted more than $514 billion in losses and writedowns since the beginning of last year as the U.S. mortgage crisis deepened. Bank of America Corp., the biggest U.S. consumer bank, agreed to acquire Merrill Lynch & Co. yesterday for about $50 billion.

The seizure in the credit markets and increase in short-term borrowing costs this year triggered doubts over the validity of Libor, which is administered by the London-based British Bankers' Association and is used to calculate rates on $360 trillion of financial products worldwide.

http://www.bloomberg.com/apps/news?pid=20601087&sid=azlzSeGqHCcc&refer=home