rba cuts 0.25

I put in a pricing request to CBA on Monday for just over $1 mil fixed for 3 years and got 0.45% off the rate. Then today they announced a further 0.25% drop.

So net rate to customer 4.39%!! I am not sure if I put in a similar request today whether I would get 0.45% off?
 
Again, the rates are so low that if a business is relying on this cut to survive, there's probably no helping them at this point.
Speaking for myself; any rate cut will allow me to improve my cashflow and allow me to reduce debt and interest and get back on my feet fairly quickly..

Over 6 months, it can be enough to allow folks to get themselves out of the hole.

Once out of the hole, the recovery can be exponential - as long as they don't go back into debt on the back of a rate cut and freed up cashflow.

Of course; it depends on your debt level. Mine is 7 figures (across all debts - not just the business), so it's a significant help...if it is passed on.

The Banks are making obscene profits, so they should...but they are not of moral conscience typically.
 
Speaking for myself; any rate cut will allow me to improve my cashflow and allow me to reduce debt and interest and get back on my feet fairly quickly..

Over 6 months, it can be enough to allow folks to get themselves out of the hole.

I'm with Pete on this one. An interest rate cut is certainly beneficial, but it's not going to be the catalyst for someone digging themselves out of a debt hole.

Using your reasoning, a 0.25% increase would send you broke.
 
Only 6 banks has made announcement on their rate out of ~42.

Westpac- 0.28
St George - 0.25
Me Bank- 0.25
ING- 0.25
CBA- 0.25
BOQ- 0.25

ANZ meets on Friday and will make their announcement than....which i presume most banks will follow on..
 
So money just got cheaper across the board - I think Fixed rates will be the battlefront for the next few months - watch for all the sub 4.5 or 4.6% 3-5 year rates that become freely available in the next few weeks. If you have a large $$$ debt across a portfolio and can get it set for 3 years or more @ 4.5% ish, that's pretty good going.

Borrowing capacity will have just had a little nudge upwards as well, as servicing calcs are adjusted ... all in all, this will fuel another few months of Sydney price rises.

Got to be really careful of bubbles forming, does the RBA. Sydney especially.
 
So money just got cheaper across the board - I think Fixed rates will be the battlefront for the next few months - watch for all the sub 4.5 or 4.6% 3-5 year rates that become freely available in the next few weeks. If you have a large $$$ debt across a portfolio and can get it set for 3 years or more @ 4.5% ish, that's pretty good going.

Borrowing capacity will have just had a little nudge upwards as well, as servicing calcs are adjusted ... all in all, this will fuel another few months of Sydney price rises.

Got to be really careful of bubbles forming, does the RBA. Sydney especially.

Wait! Be patient! Don't fix yet!

More cuts to come!

25bps ain't enough for the RBA.

Market is pricing in at least 2 cuts in 2015.

And re serviceability, APRA is requiring a floor rate. So it's not gonna improve even if the interest rate falls to 3%.
 
I put in a pricing request to CBA on Monday for just over $1 mil fixed for 3 years and got 0.45% off the rate. Then today they announced a further 0.25% drop.

So net rate to customer 4.39%!! I am not sure if I put in a similar request today whether I would get 0.45% off?

bummer for me. I just settled at christmas time and got a 4.8% 3 year fixed rate. I'm missing out on the drop.

Oh well, thems the breaks! On the positive side, my other mortgages are all SV and they'll drop :)
 
I put in a pricing request to CBA on Monday for just over $1 mil fixed for 3 years and got 0.45% off the rate. Then today they announced a further 0.25% drop.

So net rate to customer 4.39%!! I am not sure if I put in a similar request today whether I would get 0.45% off?

That is a great rate!

Though, with another cut expected later in the year, might be wise to wait a little longer fixing?
 
Wait! Be patient! Don't fix yet!

More cuts to come!

25bps ain't enough for the RBA.

Market is pricing in at least 2 cuts in 2015.

And re serviceability, APRA is requiring a floor rate. So it's not gonna improve even if the interest rate falls to 3%.

Re serviceability, APRA have indicated the 7% figure on their December letter to the banks. I think what you'll see is some of the lower serviceability lenders improve, whereas the higher serviceability lenders (Macquarie) just build some breathing space.
 
Got to be really careful of bubbles forming, does the RBA. Sydney especially.

I've said it before on SS, but I think credit will be reigned in. Cash outs area the obvious are where i forsee tightening (and it has already begun for some lenders).

From the RBA's angle, they want to stimulate activity, not prices. Price rises in housing transmit into higher consumption via wealth effects, but unlikely to be that desired given the costs to financial stability of people leveraging up to spend spend spend.

Narrowing squarely in the housing context, construction in the primary market (new stock) is a high multiplier 'activity'. Creates jobs, non-tradeable, etc. Lowering funding costs will ease financing conditions for developments, and in theory, stimulate more construction = good news and what they're after.

However, the impact of trying to increase activity, is a surge in house prices (as you've mentioned). One way to control this is to control credit growth (I believe you've mentioned credit being the front and centre of the long run growth story). This is becoming more and more normal in Asia.

This policy mix - lower rates and credit tightening (or 'macroprudential' as the media put it), could be the combination for the year ahead.

Can't imagine 2-3 rate cuts happening and the RBA/APRA sitting pretty watching prices rise and debt accumulate.
 
Considering the last rate cut was 18 months ago and economic conditions don't look flash, a 25bp cut is hardly alarmist.

Put in perspective, the RBA still has a full 9 more cuts available to them (based on a normal 25bp cut).

That's still heaps in the tank in comparison to therest of the worlds main economies.
If we hit zero, then the world is in the toilet .....period
 
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Much of the EU has a reserve rate of 0.05%, Sweden and Japan are both on 0% and Switzerland is at -0.75%!

Sure, they're not doing as well economically as they'd like to, but I'd argue that they're not in the toilet either.

http://www.tradingeconomics.com/country-list/interest-rate

My point is that the RBA has a heap more in the tank, even though we are at all time lows in rates here, it's just new to us all.

Put in perspective we are the "lucky country"
 
The bank said now RBA drop their rate, their profit margin also drop and if I were to apply for a loan today, I would likely get 0.25% less in discount. Is there truth in this?
 
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