RBA Reduces rates by 0.50%

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.
I could be wrong but do the RBA only modify rates on 25point increments?

If so then if the banks did pass on full RBA changes then are you saying that the RBA would have only moved 25 points (for a 25 point bank reduction)?

What was the goal of the RBA? a bank 25 point reduction? If so then we got more than they wanted (but probably still within their tolerance range)

If the RBA's changes are in 25 point bands then surely the outcome that they want had a tolerance range and is not a specific number outcome.
 
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%!!!!!
Okay. How much are the banks paying you for this, Peter? :)
 
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.
Its irrelevant what the RBA thought the banks were going to do. The point is there is only so much room for manoeuvre the RBA have to steer the country in the right direction, and each time the banks skim a little off the top that is room for manoeuvre the RBA will more than likely never have again, effectively making it obsolete.

From a personal perspective I completely agree with Peter 14.7 re the investing opportunities that currently exist, but that doesn't stop me from thinking that this transfer of power cant be good in the long term for the country in general.

The cynic in me very much doubts that the banks will be cutting their SVR's independently of the RBA anytime soon.
 
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
Crikey! Where are they getting those returns in brisbane!!
 
The cynic in me very much doubts that the banks will be cutting their SVR's independently of the RBA anytime soon.
Agreed, but at some time commercial reality will bite, and if the spread from bank IDGAR is too big to Bank ICJAWB, then if we have an efficient market AND vals dont tank, then there should be a ceiling there somewhere.

ta
rolf
 
No, it is of utmost relevance as it directly impacted the decision. You may wish it were irrelevant, and i understand that, but wishing doesn't make it so.
If the RBA are as short sighted as you imply, then we're in a heap of trouble regardless of who is controlling the power.

Call me misguided, but previously the RBA have had a pretty good track record and been able to keep their eye on the big picture, and not bow to the pressure of various interest groups for the greater good of the country.

Clearly the banks don't have the same impartiality or remit.
 
If the RBA are as short sighted as you imply, then we're in a heap of trouble regardless of who is controlling the power.

Call me misguided, but previously the RBA have had a pretty good track record and been able to keep their eye on the big picture, and not bow to the pressure of various interest groups for the greater good of the country.

Clearly the banks don't have the same impartiality or remit.
Take a look at the last sentence of their last press release to see what is on their mind.
 
If the RBA are as short sighted as you imply, then we're in a heap of trouble regardless of who is controlling the power.

Call me misguided, but previously the RBA have had a pretty good track record and been able to keep their eye on the big picture, and not bow to the pressure of various interest groups for the greater good of the country.

Clearly the banks don't have the same impartiality or remit.
I agree the RBA is mostly on the money, so to speak. In their defense it is reported today that AUS, NZ and one other place else, are the only Countries in the OECD that report CPI (inflation) quarterly. Everyone else is monthly.

We should be measuring monthly. You could see an item drop 0.2% two months in row then rise through an anomaly ( like storm) 0.4% and the measure would say no change and be false in the actual direction.

Peter 14.7
 
Well they have to cut commercial by 50 bps because that's dictated by the cash rate - the only thing that they can control is their margin....
NAB on the other hand offers their own 'bank bill rate' so they have room to manipulate the base rate in addition to the margin on top.
 
Given the banks taking something 'off the top' of the RBA reductions, I am wondering whether this will happen again if & when the RBA reduces interest rates in the next month or two.
 
Given the banks taking something 'off the top' of the RBA reductions, I am wondering whether this will happen again if & when the RBA reduces interest rates in the next month or two.
Well there was this just this arvo to give us hope of more cuts from the RBA -

Australia's central bank today downgraded its outlook for economic growth and saw much lower inflation, leaving the door ajar for more cuts in interest rates following a surprisingly large 50 basis point easing this week.
Read more: http://www.smh.com.au/business/rba-cuts-growth-inflation-forecasts-20120504-1y2zt.html#ixzz1tskR4snV

As to the banks keeping a slice, why not? All they have to do is say "cost of funding", and no-one knows what the heck they're actually talking about any more. (Apparently even gnomes don't!) And no one less than Dr Hewson himself is advocating a cash rate of 2% (or, at least I hope he doesn't mean an SVR of 2%).
 
As to the banks keeping a slice, why not? All they have to do is say "cost of funding", and no-one knows what the heck they're actually talking about any more. (Apparently even gnomes don't!)

May 2, 2012


Australia & New Zealand Banking Group Ltd. (ANZ), Australia’s third-largest bank by market value, said first-half profit climbed 10 percent on higher overseas income.

Net income in the six months ended March 31 rose to A$2.92 billion ($3.02 billion) from A$2.66 billion a year earlier
...

Underlying profit in Australia fell 7 percent from the prior six months, a performance that Smith called “subdued.”

The bank’s group net interest margin, a measure of the profitability of lending, fell 9 basis points from a year earlier, more than the 6-point decline expected by analysts. Profitability was lowest in Australia, where the margin dropped 15 basis points.

Full article here


May 3, 2012


Westpac's net profit for the six months to March 31 dropped 25 per cent, to $2.97 billion from $3.96 billion in the previous corresponding period.

Westpac's cash profit, the bank's preferred measure of performance, was $3.195 billion, 1.0 per cent higher than the $3.17 billion in the previous corresponding period.

Westpac's net interest margin fell six basis points in the six months to March 31 to 2.17 per cent.
Full article here

You never know Belbo there could be some truth to Banks cost of funding, based on their recent released results.

Cheers,
Oracle.
 
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