I was wrong

Before the RBA announced there rate cut I said that if the RBA cut interest rates I would expect all the banks to cut interest rates by at least the same as the RBA. Well NAB has proven me wrong.

I have had a mortgage since start of 2009 and there has been numerous occasions when the banks have not passed the interest rate cut in full or increased by more than the RBA. I estimate that the banks increases in interest rates over the RBA is at least 1%. Were the banks interest maragins so low before the GFC that they hardly made a profit, or are the banks profit gauging or a bit of both?

In the short term I can't see what borrowers can do to avoid the increase movement than the RBA execpt fixing there loans. I'm glad that our banks are healthy and for now I don't want any more government intervernce into this area for now. I do believe there is some truth that funding costs have increased since the GFC.

I maybe waiting for a while but I can't wait to see the banks starting to decrease varaible rates by more than the RBA or increase them less than the RBA.
 
Hope you're wrong again :)

I can't give you a link, but Gail Kelly (Westpac CEO) was on Inside Business approximately 6 months ago saying by the end of 2012 she was expecting rates to ease outside of RBA announcements due to the funding they did at the end of 2008 coming out and being re done at lower margins.

Don't forget from September / October 2008 until probably March 2009 all their funding (which is predominantly over 3 years) was at 200 point margins, getting that funded at today's rates should take the pressure off rates a fair bit.

She was unequivocal about what she was saying and AK was sure to push her to committing to interest rates decreasing because of this.
 
What I would be keen to see is if there is a strong customer backlash against nab and if competition remains intense such that CBA and WBC continues to target nab customers with offers to move across.
 
By next week everyone will have forgotten what nab did...

As much as they will grab the headlines now, by December 1 the story will be "nab has the cheapest standard variable rate in the market..."
 
Hard to argue with the NAB's decision....

In our local rag this morning, the following table was presented comparing the standard variable rates of the big 4 Banks ;

NAB......7.47%
ANZ......7.55%
CBA......7.56%
WBC.....7.61%

We then have the Treasurer - who admittedly, has presided over the biggest debt increase in Australia's hisatory and can't add up to save himself, said that NAB's decision to only pass on 20 basis points cut was a "kick in the guts".

He then went on to say, "NAB customers have the choice to walk down the road and get a better deal."

Looking at the numbers presented, as usual, I don't agree with his statement...certainly not with a big 4 Bank.

Footnote : As usual, there is an asterisk with the table, so the pedants and lawyers of the world cannot nitpick, where it states "All banks offer special rates on different products."

Hmmmm, I thought Banks only had one product to sell - money. What else do they sell ??
 
To be a pedant - insurance & widow's houses who have gone guarantor for their offspring who find they can't make their own loan repayments. :(

The standard defence for the widow is that they did not understand a word of english and thought they were signing a pizza delivery form and this usually enables them to get out without paying.
 
We then have the Treasurer - who admittedly, has presided over the biggest debt increase in Australia's hisatory and can't add up to save himself, said that NAB's decision to only pass on 20 basis points cut was a "kick in the guts".

If you follow his line of argument, that RBA changes should be passed on in full, the current interest differentials between banks should be maintained for all time. If I was a bank making lots of money (not that banks do!), then any temptation to cut rates by 0.3% now would be instantly quashed by the knowledge that if at some future point I want to put a 0.3% rise on the back of an RBA 0.25% I'd be pilloried.
 
Hmmmm, I thought Banks only had one product to sell - money. What else do they sell ??

maaaaate - you're missing the point.

they sell a beautiful pastel "product", as soft as knitted toys that have cute little made-up personalities that make you smile every time they talk.

it's the vibe, it's mabo.
 
Hard to argue with the NAB's decision....

In our local rag this morning, the following table was presented comparing the standard variable rates of the big 4 Banks ;

NAB......7.47%
ANZ......7.55%
CBA......7.56%
WBC.....7.61%

We then have the Treasurer - who admittedly, has presided over the biggest debt increase in Australia's hisatory and can't add up to save himself, said that NAB's decision to only pass on 20 basis points cut was a "kick in the guts".

He then went on to say, "NAB customers have the choice to walk down the road and get a better deal."

Looking at the numbers presented, as usual, I don't agree with his statement...certainly not with a big 4 Bank.

Footnote : As usual, there is an asterisk with the table, so the pedants and lawyers of the world cannot nitpick, where it states "All banks offer special rates on different products."

Hmmmm, I thought Banks only had one product to sell - money. What else do they sell ??

We had the same table in our own newspaper. But you missed the point - the NAB didn't pass on the whole cut. Repeat: the NAB didn't pass on the the whole cut! Wh..? How could they do that?! :eek:

Now... let's go down the pub and complain about nasty bankers and how they rip us all off...
 
Who was it who said, "Interest rate will always be lower under us!", and then delivered - what was it? - nine consecutive interest rate rises, before losing government? (I know, not fair, but bear with me .... )

The answer is, of course, the Howard Liberals, who most admittedly completely wiped out all Aust government debt, all be it during an economic boom that of course necessitated those very interest rate increases.

And now, we have, what? A great rise in Aust government debt?

But, didn't anyone notice that this came along during a little thing called the GFC - or - critically, the parlous state of essential national infrastructure inherited in that mix?

And this makes Wayne Swan's mathematically challenged?

Let me say this: I'm no great fan of either band of brigands today, but that's just me holding out for principles.

What I honestly can't see though is anything but naked party politics in such a critique.

Both opposing cadres are now just putting their best spin on claiming to be able to govern forces well out of their control, in their respective hope of winning over the increasingly nervous political middle ground, without offering any real political leadership (as opposed to political leavings).

I'd personally hope PIs would develop a longer term outlook in all such things given their greater interests in both the economic and consequently the political.
 
What I honestly can't see though is anything but naked party politics in such a critique.

....hmmmm....the reason people can't see is either ;

(a) they are as blind as a bat, or
(b) they have their head stuck too far up their jacksey.

Which one are you ??

Try though you might, you cannot argue with over 20 years of hard facts.

The below graph doesn't need any explanation. The blue bit is the reason Australia is better than most countries.

As for the red bit....well, everyone can make their own mind up.

Are they the same in ability in managing the economy....not even close.
 

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