"Westpac, St George lift rates"

[DavidMc]

# Colin Kruger
# January 11, 2008 - 5:41PM

http://business.theage.com.au/westpac-st-george-lift-rates/20080111-1lgs.html

After much speculation, St George and Westpac lifted their variable home loan rates by 0.20 per cent and 0.15 per cent respectively, in response to higher funding costs related to the global credit crunch.

The move drew fire from Federal Treasurer Wayne Swan criticised the "excessive'' increase.

"My views are well known - I consider rate rises as large as those announced by the ANZ at the beginning of the week and St George today to be excessive,'' Mr Swan said in a statement.

"I say to all banks, you will be judged very harshly if you try to take advantage of the US sub-prime crisis by lifting rates excessively.''

Westpac's first option home loan rate will increase to 8.14 per cent per annum and the standard variable home loan rate will increase to 8.72 per cent per annum, effective January 14.

St George's standard variable rate will increase from 8.57 per cent pa to 8.77 per cent pa.

"This will be effective Tuesday, January 15, for new and existing consumers," St George said.

 

[Pushka]

Makes the RBA monthly meetings kind of irrelevant now, doesnt it! Just hope the media stops its regular "interest rates will rise" doom and gloom story every couple of weeks just before the RBA meets.

 

[Gremlin]

I'm not convinced the RBA won't still raise rates. As mentioned in numerous threads, increasing mortgage spreads impacts approx 30% of the population. An increase in the official cash rate has the impact of making borrowing more expensive AND making saving more attractive - a much greater impact on the market as it impacts the behaviour of the savers and borrowers. Inflation is still likely to be at or above the top of the RBA's mandated range come Feb and beyond. And bank bill futures markets are still pricing in a very good chance of an increase in Feb.

 

[Andrew_A]

Am I the only one thinking rate drops are a real possibility? We have rates near the highest in the world, there are a few higher including NZ, but not many. Central bankers of the world are in easing mode.

If Emerging markets are the next pop in the globubble then how do you think that might affect Australia?

I'm 100% variable and will stay so till my view is painful enough for me to change, which I would as guessing the future is a tough gig unless you charge for your views. I'm not betting on my view in any other fashion apart from not fixing. Would suggest everyone make up their own minds of course.

 

[alexlee]

I'm still thinking we're going to have short term rate rises, then rate cuts as a recession takes hold. If I had to guess I would say rate cuts starting 2009.
Alex

 

[VYBerlinaV8]

My guess is that it will take another 0.5 to 0.75 to get us to the top of the cycle, and that will take anywhere up to a year to happen. Coupled with the global slowdown, this should have the effect of pushing us into a downward rates cycle for a few years. Of course, if the Australian economy continues to do well, that downward cycle may end up being fairly shallow.