It's started. St. George lifts rates by 0.2%.

haha beat me by 3 min - studid coffee break!

Interesting, I hope westpac who is the underwriter for my loan doesnt follow suit!
 
AMP, it was the bank I suppose to have my loan with , several weeks ago on their site it was 8.84%, now 8.91%, so 0.07% increase, they
are trying to do it in small increments so people (& the media) won't notice !

But I bet the next is CBA....
NAB is a bit slow in pushing up rates I felt ?
 
Why are they increasing their interest rates and what is the RBA doing about this?
In the US when the credit crisis appeared the fed reserve pumped billions of $ into their lending system. Is our RBA here doing anything here?

It's hard for me to understand why Oz banks need to raise their interest rates
when they lend money in Oz $ they don't have to borrow it from overseas.

What happened to the billions of $ from our governments surplusses?
Where is all the money from our superanuation funds?
surelly it's not all locked up in shares or is it?

Cheers
 
ziggy the amount of questions you have asked is too much for me at midnight. here is a few quickies:

- whilst they lend in AUD they can still and do source a lot of funding from europe and the US
- RBA is increasing rates as a measure to try and slow the economy on the back of a resource boom - the whole economy isnt just about property
- lending costs go up as a lot of non-banks or non-big 4 banks get their funding from short term cash positions which have gone up a lot lately - this is not as an affect of the RBA increases
- govt surpluses lately have been going into funds such as the future fund, health fund etc. the idea is that "get a fund to $100 billion and it should make 8% a year, take out 3% for inflation and you have a $5 billion annuity"
- not all in shares but in the case of say the future fund a lot of it is. Shares and Telstra that is.

ok, night all :)
 
ziggy2214 said:
Why are they increasing their interest rates and what is the RBA doing about this?
In the US when the credit crisis appeared the fed reserve pumped billions of $ into their lending system. Is our RBA here doing anything here?

It's hard for me to understand why Oz banks need to raise their interest rates
when they lend money in Oz $ they don't have to borrow it from overseas.

What happened to the billions of $ from our governments surplusses?
Where is all the money from our superanuation funds?
surelly it's not all locked up in shares or is it?

Cheers
Click to expand...

Its got nothing to do directly with the RBA, but rather the debt funding markets. I mentioned this in another thread already warning investors on this forum.
Two major factors at play here:
1) Credit spreads are still above long term averages in australia, so of course ALL financial institutions will be increasing variable rates until the increase in the rate matches or exceeds (see next point) the increase in the spread of the funding cost
2) Bank interest rate margins are at 10yr historical lows. And this before the credit crisis even started. Competition for loans over the last 10yrs erroded net interest margins. The banks responded for this in three ways
a) increasing indirect bank charges
b) writing more loans
c) reducing doubful debt provisions as a % of loans underwritten.

In the current market banks cannot increase bank indirect bank charges much further, they have to be very careful writing loans and doubful debt provisions are increasing as a % of loans written (for the first time in 10yrs).

Conclusion: you had better be bloody prepared for more interest rate rises ABOVE the RBA movements, and this will continue for a while yet.
Your best hope is that RBA REDUCES interest rates so that the banks KEEP THEIR INTEREST RATES THE SAME!!!!!!
 
The Bludger,

This is no suprise. For most of us with Lo Doc loans, Interest rates have been going up by more than a mere .2% outside the RBA. Only two weeks ago I had a 0.8% increase.

Chillia explains it well. We need to batten down the hatches and hold on tight!:eek:

Regards Jo
 
chilliaa said:
Your best hope is that RBA REDUCES interest rates so that the banks KEEP THEIR INTEREST RATES THE SAME!!!!!!
Click to expand...
They should have done this already or at least they could have pumped a few billion $ into our lending markets like the fed Res. did in the US.
It's not that they would have lost money doing this.
Cash makes more money than shares at the moment
 
CBA by 14 pts as u already know

getting interesting, starting to actually see some spread between lenders now, wonder how long it will last.

STG CBA spread is now 9 pts..............for this week .



ta
rolf
 
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