RBA Reduces rates by 0.50%

[Perth Investor]

The budget could be the last straw for JG (and by definition WS in his job) if they don't handle it VERY well.

With public support at 27, they have no margin for error.

Kevin will be laughing so hard when they ask him nicely to come back and run the party...

 

[Peter 14.7]

When JG is replaced the indies will revolt as their deal was with JG and no one else.

Humm, hard to say, clouded it is ( to continue Yoda reference).

I guess it comes down to this:

• are the independents more worried about personal power than good government?
• will the votes in their electorates hurt them for the mess or accept they got the most $$$ they could from the cards they were dealt?
• will their super be more or less to click over another year?

Of course the deal the independents could do now that would be very, very...very politically clever is go to Abbott and offer him Government.

Why?

1. It shows they stuck to their commitments of only going giving power when warranted. With Slipper and Thompson and if Gillard falls, they can say "it is no longer warranted, we are men of our words, your out, your in".
   
   
2. Makes Rudd a lame duck
   
   
3. It puts the pressure on Abbott and gives them breathing space to put "a pox of both houses". Then if he stumble they can cry "different rider ( lib over Labor) , same horse (big parties)" stay with us and KNOW we will roll out the pork for our electorates any which way.
   
   
4. Abbott would have hard time refusing after calling many times they should leave the Government. But he gains power without the mandate of the people and with a hostile Green Senate. He ends up like, ....get this...., Julia Gillard!

No mandate, no real power, beholding to minority groups. Then until the 2013 election he has to be very careful not to lose momentum and trip up. Yes he could go early but he would at least have to try first Say 4 months) and say I cannot work with this or he will have to refuse to take it.

I said it first!

regards, Peter 14.7

 

[Gremlin]

Of course the deal the independents could do now that would be very, very...very politically clever is go to Abbott and offer him Government.

Why?

1. It shows they stuck to their commitments of only going giving power when warranted. With Slipper and Thompson and if Gillard falls, they can say "it is no longer warranted, we are men of our words, your out, your in".
   
   
2. Makes Rudd a lame duck
   
   
3. It puts the pressure on Abbott and gives them breathing space to put "a pox of both houses". Then if he stumble they can cry "different rider ( lib over Labor) , same horse (big parties)" stay with us and KNOW we will roll out the pork for our electorates any which way.
   
   
4. Abbott would have hard time refusing after calling many times they should leave the Government. But he gains power without the mandate of the people and with a hostile Green Senate. He ends up like, ....get this...., Julia Gillard!

No mandate, no real power, beholding to minority groups. Then until the 2013 election he has to be very careful not to lose momentum and trip up. Yes he could go early but he would at least have to try first Say 4 months) and say I cannot work with this or he will have to refuse to take it.

I said it first!

regards, Peter 14.7

Will never happen. Abbott's first act under that scenario would be to call an election. The indies would lose all power they have as Abbott would win in a landslide.

 

[Belbo]

What do you think will make [the independents] pull out?

The shame of remaining allied to a government that is bringing the parliament into disrepute by retaining not just one but almost certainly two unfit individuals (the mud of unfitness will stick whether those individuals are found guilty of any offence or not).

The independents did nothing wrong in their own eyes to form a minority government with Labor, no matter what the coalition rabble-rousers say. A representative must use their own judgement, not slavishly do only what the majority of their constituents want (otherwise why wouldn't we just have mob rule and be done with re-presentation, eh?). But they will do something wrong if they don't continue to hold to the same principle of acting on their judgement. And soon it will be impossible for them to not judge this government as damaging the fabric of our representative institutions.

I may be a left-leaning liberal democrat, Peter, but I'm not a Labor stooge.

 

[House_Keeper]

I may be a left-leaning liberal democrat

I like that description

 

[MangoMadness]

The shame of remaining allied to a government that is bringing the parliament into disrepute by retaining not just one but almost certainly two unfit individuals

Would they not be falling on their own sword though if an election were held due to voter sentiment about independants?

Would they just accept that and say 'we have done all we can, time to give the game away?'

 

[Belbo]

Would they not be falling on their own sword though if an election were held due to voter sentiment about independants?

If my reading of them is correct, yes. They'd wear the consequences of making what they see as the right call. I think that's exactly what they've always done.

 

[oracle]

SVR goes from 7.31% to 6.99%.

Edit: Effective from Friday May 4th

Bunch of tightwads. I thought they would have done better or at least waited longer. I can see a compeditor making a liar of their, "Lowest SVR", promise.

Yesterday on a news channel I saw an interview with CBA CEO about what CBA intends on doing about their SVR. He said something like they have X no of depositors, Y no of shareholders and Z no of mortgage holders. They have the difficult task of making sure they maintain the delicate balance of right interest rates so all parties are happy.

When I heard that I had a bit of chuckle. The truth is the only party they care about keeping happy is their shareholders. Depositors and Mortgage holders are to be kept happy only to the extent that enable them to keep satisfying their duty to keeping their shareholders happy. That is the bitter truth!

Cheers,
Oracle.

Just heard on The Business show NAB's SVR rate goes down by 32bp while rates on deposits go down full 50bp

Mortgage Holders - Lose
Depositors - Lose
Shareholders - Win

Why am I not surprised

Cheers,
Oracle.

 

[Peter_Tersteeg]

Easy solution for depositors. Pull your deposits and buy shares. With fewer depositors, cost of funding increases, NAB increases margins, borrowers loose further, share prices and dividends increase. Angry depositors are now happy shareholders!

 

[boomtown]

Given ANZs attitude they will probably increase their SVR by 5 basis points.

 

[BayView]

Just heard on The Business show NAB's SVR rate goes down by 32bp while rates on deposits go down full 50bp

Mortgage Holders - Lose
Depositors - Lose
Shareholders - Win

Cheers,
Oracle.

How do the mortgage holders lose if the SVR goes down by 32bp?

Wouldn't any decrease in interest rates be a good decrease?

I've long since let go of the mindset that the Banks will pass on any full amount of a decrease when set by the RBA;

Banks are simply a ruthless business, and will only do what is in the interest of the shareholders.

As long as we all remember that we won't get too disappointed.

 

[Graemsay]

There's a post about the Australian Dollar at the FT Alphaville blog today.

It's mostly about the relationship between the US and Australian Dollars, along with gold (so should be of interest to Hobo Jo), but contains this snippet.

The AUD/USD move makes sense when seen beside the spectre of a China led slowdown and RBA easing fears, which proved founded in the end. And now the market has priced in another 50bps of cuts to come. As the chart below shows the current RBA cash rate is at 3.75 per cent and the market expects it to decline over the next 18 months or so to close to 3.25 per cent:

The question now, says Evariste Lefeuvre, chief economist with Natixis, is whether the AUD/USD has already priced this next round of easing in — his model suggests the Aussie is already below fair value and he doesn’t see the RBA cutting rates back to their 2009 level of 3 per cent.

 

[oracle]

How do the mortgage holders lose if the SVR goes down by 32bp?

Wouldn't any decrease in interest rates be a good decrease?

Before the GFC when competition was ripe in the banking industry and had the RBA reduced rate by 50bp how much do you think the banks would have passed? Do you believe Mortgage Holders are better off with 32bp rate reduction or 50bp?

Mortgage holders do benefit with 32bp rate reduction than before. But if you look at the bigger picture out of the 3 parties who benefited the most from the RBA rate cut? Undoubtedly, shareholders! And at whose expense? Unfortunately, mortgage holders and depositors!

Cheers,
Oracle.

 

[Belbo]

Just in -

Commonwealth Bank will lower its standard variable interest rate by 40 basis points - joining National Australia Bank in holding back some of the Reserve Bank's 50 basis-point cut earlier this week.

Read more: http://www.smh.com.au/business/comm...owing-rates-20120503-1y03b.html#ixzz1tl0xtfTk

 

[Peter 14.7]

The shame of remaining allied to a government that is bringing the parliament into disrepute by retaining not just one but almost certainly two unfit individuals (the mud of unfitness will stick whether those individuals are found guilty of any offence or not).

The independents did nothing wrong in their own eyes to form a minority government with Labor, no matter what the coalition rabble-rousers say. A representative must use their own judgement, not slavishly do only what the majority of their constituents want (otherwise why wouldn't we just have mob rule and be done with re-presentation, eh?). But they will do something wrong if they don't continue to hold to the same principle of acting on their judgement. And soon it will be impossible for them to not judge this government as damaging the fabric of our representative institutions.

I may be a left-leaning liberal democrat, Peter, but I'm not a Labor stooge.

I agree with the above.

I also think the independents did the right thing. Their job is to be part of the process. Who would blame then for extracting concessions for their electorate when the power is with them. That is actually, how the system is mean to work.

Please don't think, I think your a stodge. In fact, whilst i have never assessed myself , I am probably also a left-leaning liberal democrat if that means, socially minded civil libertarian, centre but liberal and free market believer.

My political observation posts may come across as smart alec but they are not intended that way.

It is just that I worked a couple years closely in politics and developed the "minder mindset" of "doing a deal". I pride myself I did what was right but to beat the evils ones, you had to get in the mud with them. And I worked on the Labor side.

So I have two views, the right for the country opinion, and that what is politically savvy thoughts.

Kudos for your post above.

Peter 14.7

 

[mrmonopoly]

Just in -


Read more: http://www.smh.com.au/business/comm...owing-rates-20120503-1y03b.html#ixzz1tl0xtfTk

Thanks Belbo, was waiting for this one.

The question is will this trimming ever stop? and how can it be stopped? Its all well and good Swanny telling everyone to vote with their feet, but its simply not practical for everyone to refinance every time the banks change their strategy. This moving independently has to stop for the greater good, or am I just delusional to believe this could even be a possibility.

Sure its still a 40 basis point drop, but with each little bit here and there the RBA are handing over the power and ability to steer the Australian economy and instead bit by bit Australias destiny will be controlled by the greediest of all which can surely only end badly. :S

 

[Peter_Tersteeg]

ING cut their rates by a mere 30 points.

My comparison chart is starting to look very interesting.

 

[Crabnet]

Thanks Belbo, was waiting for this one.

The question is will this trimming ever stop? and how can it be stopped? Its all well and good Swanny telling everyone to vote with their feet, but its simply not practical for everyone to refinance every time the banks change their strategy. This moving independently has to stop for the greater good, or am I just delusional to believe this could even be a possibility.

Sure its still a 40 basis point drop, but with each little bit here and there the RBA are handing over the power and ability to steer the Australian economy and instead bit by bit Australias destiny will be controlled by the greediest of all which can surely only end badly. :S

The RBA cut by 0.5 knowing full well that the banks would reduce rates by less. That was their intention in an effort to contain the escalating Aussie dollar.
Let's wait and see in a year or two how they tackle rising inflation which Australia tends to import. Will they be ahead of the game then or playing catchup with the economy as they appear to be doing now.

 

[Hoffy]

The RBA cut by 0.5 knowing full well that the banks would reduce rates by less. That was their intention in an effort to contain the escalating Aussie dollar.
Let's wait and see in a year or two how they tackle rising inflation which Australia tends to import. Will they be ahead of the game then or playing catchup with the economy as they appear to be doing now.

Exactly. If the banks were going to pass on the full amount, then the RBA would not have cut by 50. I'm not sure why that seems so hard to understand.

 

[Peter 14.7]

Dear All

Whilst the banks are only offering 0.4 to 0.3% off are we all at risk of "not seeing the forest for the trees"

IMO, now is great if not one of the best time to invest in Property.

With package discount rates at 5.99% , again, I repeat, 5.99%!!!!!

Three friends who I advise have bought in SE QLD for $240 to $250k and renting for $340 to $370 a week. Rental demand is strong. Depreciation is high. So they are positive geared.

Why not buy 3 and lock in 3 years at 5.99%.
If they abolish Neg gear so what?
If there going to rush of stock on the market? No way.
In a slowing economy will people feel tempted to buy their own place? Unlikely.
Where the down side????

I put this to say whilst IR is one part of the equation, a good buy that stacks matters more.

If I personally was in a position to buy more instead being on Veto from Wife (long story.........moved to Country, renoed heritage house on the promise a new home would be next, but keeps getting put aside whilst a number of IPs have been bought) I would be getting 2 more in that area if not three.

Get in I say, Peter 14.7