Reserve Bank consider 0.5% rate rise

[Pete_d]

Minutes released from the Feb 5 RBA meeting...seems we almost had a 0.5% lift in rates and could still happen next month.

http://business.theage.com.au/reserve-bank-considered-05-rate-rise/20080219-1sx5.html

The Reserve Bank of Australia (RBA) had considered raising interest rates by as much as 0.5 per cent earlier this month, and debated whether more rate raises were needed in subsequent months, minutes from the central bank's last board meeting reveal.

One economist said a 0.5 per cent rate rise next month can't be ruled out

 

[alexlee]

Of course it can't be ruled out. I think the RBA is trying to scare the market. In the sense that the RBA would rather we all rein in consumption on our own without them having to apply the blunt tool of interest rates. I think it was the Herald that used the frog in a boiling pot analogy.
Alex

 

[trendsta]

Some funny views here..

When rates are going up IR being touted as blunt instruments.
When rates were going down (and potentially in future when they go down) im sure no one will complain IR are blunt instruments..

hehe ...

 

[alexlee]

Academic interest only. Actually, rate rises (especially if they prevent even more rate rises in the future, as I believe the current cycle does) are more discriminating when they go up. That is, when rates go up, the financially conservative win because they can afford to hold or buy more, and the financially inept burn. When rates go down, any idiot with a pulse can make money.

I think I'll benefit more from rising rates, because it's going to shake out the financially inept, allowing me to pick up more assets for the long term.
Alex

 

[sash]

Interesting article....I am wondering why the RBA did not put it up by 0.50% percent earlier?

I feel that 0.25% is not going to affect people as they do not see a big hit all at once.....people are very adaptable and they adjust as if the rate increase was only a pin *****.

I believe if we got a 0.5% in Oct./Nov. 2007, I don't think the consumers would have kept spending. But putting 0.50% in March is leaving it a bit late....it will spook the tragic share market and also panic people.

I any case, I think we will see a minimum of 8.75-9% interest rates (after the 0.7% discount) shortly. However, I don't think 10% is in the cards....at this rate it will be like having 50% increase in mortgage payments since 2003 when variable rates were about 6.5%.

Gee....50% increase in repayments...lets see if someone bought a house for 500k in Sydney in 2003 and got a mortgage of 450k....their repayments would have increase from approximately 33k to 41k today. That is 8k more per year! And if they bought in the West....they would be effectively be paying and asset that is less than what they paid for it!

 

[mystery]

Minutes released from the Feb 5 RBA meeting...seems we almost had a 0.5% lift in rates and could still happen next month.

http://business.theage.com.au/reserve-bank-considered-05-rate-rise/20080219-1sx5.html

The Reserve Bank of Australia (RBA) had considered raising interest rates by as much as 0.5 per cent earlier this month, and debated whether more rate raises were needed in subsequent months, minutes from the central bank's last board meeting reveal.

One economist said a 0.5 per cent rate rise next month can't be ruled out

An interesting view from a short article on the Terry Ryder Hotspotting website titled "Clueless RBA" ....

http://hotspotting.tumblr.com/post/25532656

Martin

 

[marg4000]

In the early 1970s we signed up to build our first home.

Interest rates 6.25%.

Gough Whitlam's government reckoned the economy was overheating, so in one hit interest rates went up TWO PER CENT - to 8.25%.

Many people lost their homes as a result. Thankfully, we didn't.

And people are worrying about .5% ????
Marg

 

[Superstitionist]

In the early 1970s we signed up to build our first home.

Interest rates 6.25%.

Gough Whitlam's government reckoned the economy was overheating, so in one hit interest rates went up TWO PER CENT - to 8.25%.

Marg

Were you in the standard variable interest rate, if you were, then I must be storing the wrong historical data...

Based on my info, there were only 1 rate raised in 1970:
Mar-1970 5.88%
Apr-1970 7.25%

Since then, there were only two occasions where the interest rates are went up 2%.

Jun-1974 8.38%
Jul-1974 10.38%

and

Mar-1986 13.50%
Apr-1986 15.50%


Super.

 

[eKwatee]

I work in the RE industry in South Australia and since the rate increase before this last one we have definitely seen a decrease in open home numbers by at least a third and where we may have had 8 offers the first week on a property this has now been reduced to a more realistic 2-4 and properties that would have sold in a week are now taking 2-3 weeks. When todays statistics are released you will definitely see a flatter housing market in SA. I think the RBA increases have finally hit the housing market in SA.