All Topics / Finance / One more hike from the RBA

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  • Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    At its meeting today, the Board decided to raise the cash rate by 25 basis points to 4.25 per cent, effective 7 April 2010.

    The global economy is growing, and world GDP is expected to rise at close to trend pace in 2010 and 2011. The expansion is still hesitant in the major countries, due to the continuing legacy of the financial crisis, resulting in ongoing excess capacity. In Asia, where financial sectors are not impaired, growth has continued to be quite strong, contributing to pressure on prices for raw materials. The authorities in several countries outside the major industrial economies have now started to reduce the degree of stimulus to their economies.

    Global financial markets are functioning much better than they were a year ago and the extraordinary support from governments and central banks is gradually being wound back. Credit conditions remain difficult in some major countries as banks continue to face loan losses associated with the period of economic weakness. The concerns regarding some sovereigns appear to have been contained at this stage.

    Australia’s terms of trade are rising, adding to incomes and fostering a build-up in investment in the resources sector. Under these conditions, output growth over the year ahead is likely to exceed that seen last year, even though the effects of earlier expansionary policy measures will be diminishing. The rate of unemployment appears to have peaked at a much lower level than earlier expected. The process of business sector de-leveraging is moderating, with the pace of the decline in business credit lessening and indications that lenders are starting to become more willing to lend to some borrowers. Credit for housing has been expanding at a solid pace. New loan approvals for housing have moderated over recent months as interest rates have risen and the impact of large grants to first-home buyers has tailed off. Nonetheless, at this point the market for established dwellings is still characterised by considerable buoyancy, with prices continuing to increase in the early part of 2010.

    Inflation has, as expected, declined in underlying terms from its peak in 2008, helped by a noticeable slowing in private-sector labour costs during 2009, the rise in the exchange rate and the earlier period of slower growth in demand. CPI inflation has risen somewhat recently as temporary factors that had been holding it to quite low rates are now abating. Inflation is expected to be consistent with the target in 2010.

    With the risk of serious economic contraction in Australia having passed some time ago, the Board has been lessening the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker. Lenders have generally raised rates a little more than the cash rate.

    Interest rates to most borrowers nonetheless have been somewhat lower than average. The Board judges that with growth likely to be around trend and inflation close to target over the coming year, it is appropriate for interest rates to be closer to average. Today’s decision is a further step in that process.

    Richard Taylor | Australia's leading private lender

    Profile photo of WhatIfWeFinanceWhatIfWeFinance
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    @whatifwefinance
    Join Date: 2009
    Post Count: 58

    CBA have moved first and passed on 0.25% pa. Here are the details….

    Change to Interest Rates as from Friday 9 April 2010
    Today, the Group announced it would be increasing the interest rate on its standard variable rate home loans by 25 basis points following the increase in the official cash rate made by the Reserve Bank of Australia (RBA).
    The Group's new standard variable rate is 7.11% per annum.As Australia's largest home lender, we are committed to remaining competitive in the mortgage market and will continue to offer competitive pricing, policy and processes that can be relied upon.  The interest rates changes are effective Friday 9 April 2010.Note: Interest rates remain unchanged for any products not listed below.Interest rates for the following lending products (new and existing borrowings, unless indicated otherwise) will change from Friday 9 April 2010: 

    ProductNew Rate (p.a.)ChangeAssessment RateComparison Rate Effective Date
    (p.a.)(p.a.)(p.a.)
    Variable Rates Home/Investment Home Loans     
    Standard Variable Rate (including Low Doc)7.11%0.25%8.61%7.24%9 April 2010
    12 Month Discounted Variable Rate6.41%0.25%8.61%7.16%9 April 2010
    Base Variable Rate (Rate Saver) (including Low Doc)6.60%0.25%8.10%6.73%9 April 2010
    Base Variable Rate (3 Year Special Rate Saver)6.43%0.25%8.10%6.59%9 April 2010
    Lines of Credit      
     
    LOC – Residential Equity Rate (including Low Doc)7.21%0.25%8.71%N/A9 April 2010
    Equity Unlock Loan for Seniors 8.21%0.25%N/A8.30%9 April 2010
    LOC – Excess Drawing Rate17.24% 0.25%N/AN/A9 April 2010
          
    MISA     
    MISA Standard Variable Rate7.11%0.25%N/AN/A9 April 2010
    MISA – 12 mth Discounted Variable Rate 6.41%0.25%N/AN/A9 April 2010

     Note: Only the Comparison Rates and Assessment Rates have changed for Fixed Rate Home Loan/Investment Home Loan.

    ProductNew Rate (p.a.)ChangeAssessment RateComparison Rate Effective Date
    (p.a.)(p.a.)(p.a.)
    Fixed Rates Home/Investment Home Loans     
    1 Year Guaranteed Rate6.49%0.00%8.61%7.17%19 October 2009
    1 Year Fixed Rate6.64%0.00%8.61%7.19%19 October 2009
    2 Year Fixed Rate7.34%0.00%8.61%7.29%19 October 2009
    3 Year Fixed Rate7.74%0.00%8.61%7.43%19 October 2009
    4 Year Fixed Rate7.94%0.00%8.61%7.56%19 October 2009
    5 Year Fixed Rate8.04%0.00%8.61%7.67%19 October 2009
    7 Year Fixed Rate8.29%0.00%8.61%7.94%10 August 2009
    10 Year Fixed Rate8.39%0.00%8.61%8.20%10 August 2009
    15 Year Fixed Rate8.44%0.00%8.61%8.44%10 August 2009
          
    MISA     
    MISA – 1 Year Guaranteed Rate6.49%0.00%N/AN/A19 October 2009
          
    Fixed Rates Home/Investment Home Loans (MAV)     
    1 Year Fixed Rate6.49%0.00%8.61%7.04%19 October 2009
    2 Year Fixed Rate7.19%0.00%8.61%7.13%19 October 2009
    3 Year Fixed Rate7.59%0.00%8.61%7.25%19 October 2009
    4 Year Fixed Rate7.79%0.00%8.61%7.37%19 October 2009
    5 Year Fixed Rate7.89%0.00%8.61%7.47%19 October 2009
    7 Year Fixed Rate8.14%0.00%8.61%7.72%10 August 2009
    10 Year Fixed Rate8.24%0.00%8.61%7.95%10 August 2009
    15 Year Fixed Rate8.29%0.00%8.61%8.18%10 August 2009
    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Yes nothing like being backward about coming forward.

    Sure we expect everyone to rise but CBA announced it 4 minutes after the RBA.

    Richard Taylor | Australia's leading private lender

    Profile photo of DWolfeDWolfe
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    @dwolfe
    Join Date: 2009
    Post Count: 1,253

    Here is the tidbit from Comsec

    Point of View: House prices up, retail
    spending and building approvals down

    Are below normal interest rates creating a housing bubble?
    Clearly that is likely to be a question that will be discussed by
    Reserve Bank policymakers at the interest rate meeting next
    week. And the latest round of data has added further colour to
    the debate. Despite four rate hikes, house prices are continuing
    to defy the global property slowdown, rising by a further 1.4% in
    February, with the annual growth rate at a 25-month high. On the
    other side of the coin the withdrawal of stimulus has resulted in a
    slide in retail spending and building approvals.
    The latest round of retail sales data clearly highlights the difficult
    landscape faced by retailers. Consumer confidence may be
    buoyant, but it is not translating into robust spending. The
    anecdotal evidence suggests that retailers are continuing to
    discount in an attempt to entice consumers and CommSec
    expects this trend to continue over the next few months.
    Department stores and large retailers which have been more
    successful in the past compared to smaller retailers (given their
    ability to trim prices) have this time round highlighted the weak
    trading environment. Trend growth for the large retailers posted a
    meagre 0.1% in the latest month – marking the weakest reading
    in almost 16 years.
    Dwelling approvals have slumped for the second consecutive
    month, with the majority of the weakness centred on private
    sector apartments and homes. It is understandable that a period
    of consolidation is to be expected after what has been a
    phenomenal run over the last year and given the expiry of the
    first home buyer boost.
    Looking forward the housing sector is likely to cool over the next
    few months, however the sharp surge in construction loans over
    the past year will continue to have multiplier effects through the
    economy – a result that has shown up in the retail sales data with
    furniture and home improvement retailers recording the best
    annual gains in more than three years.
    The latest figures on home prices indicate that a move to a more
    neutral interest rate setting will be on the agenda over the next
    few months. However, given the weakness in consumer
    spending and building approvals, the Reserve Bank should not
    rush the rate rise – especially given that the inflation environment
    remains very weak. On balance, CommSec believes that a
    pause in the rate hiking profile is the most likely outcome at the
    April meeting.
    Savanth Sebastian, Economist, CommSec

    And also this

    The Reserve Bank Governor has warned homebuyers to expect
    rate hikes in coming months – but that doesn’t necessarily mean
    that it will happen this month. While the short-term goal is to lift
    rates another 50 basis points, each month board members will
    cut and dice the latest economic data. Of course for ordinary
    borrowers the actual timing of the moves means little, rather the
    fact that rates will most likely be at least half a percent higher by
    the end of the year. We expect no change in rates this month,
    but don’t hold the view with great certainty

    Please excuse the formatting. Go CBA they could be in the Olympics with a record time like that.

    D

    DWolfe | www.homestagers.com.au
    http://www.homestagers.com.au
    Email Me

    Profile photo of v8ghiav8ghia
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    @v8ghia
    Join Date: 2005
    Post Count: 871

    I can see the reserve bank simulating their monumental 2007 stuff up all over again – regardless of the actual rate. Sad but true……Leave rates alone and hike up the income tax I reckon…..

    Profile photo of DWolfeDWolfe
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    @dwolfe
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    Post Count: 1,253

    The only problem with hiking up income tax is that most people who can afford a top accountant wont pay over 30% tax. The only people who will hurt will be the tradies and the like who do Saturday overtime and lose all of it to tax.

    Just my opinion

    D

    DWolfe | www.homestagers.com.au
    http://www.homestagers.com.au
    Email Me

    Profile photo of Nigel KibelNigel Kibel
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    @nigel-kibel
    Join Date: 2005
    Post Count: 1,425

    The reserves bank decision to again raise interest rates tells you the degree of stupidity that is currently running this country. In 2007 the reserve bank nearly wrecked the economy by raising interest rates to quickly and now they are doing it again. Wait and see what happens to the default rate in outer areas as rates continue to rise. The bank board should be sacked.

    Nigel Kibel | Property Know How
    http://propertyknowhow.com.au
    Email Me | Phone Me

    We have just launched a new website join our membership today

    Profile photo of god_of_moneygod_of_money
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    @god_of_money
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    Richard,

    I don't think 0.25% has any impact on homeloan/property interest at all
    in fact, I wish Mr Stevens will increase it by 0.5%
    Look at the auction rate across Sydney/Melbourne… staggering 70%+ with median price 700k

    We are actually thriving post GFC

    Profile photo of GrantH_1974GrantH_1974
    Member
    @granth_1974
    Join Date: 2004
    Post Count: 190
    Qlds007 wrote:
    Sure we expect everyone to rise but CBA announced it 4 minutes after the RBA.

    So should all the Big 4, I reckon….surely they have people crunching the numbers on various scenarios, so that if the RBA decision was to cut, hold, raise by 0.25%, raise by 0.5% they would be absolutely clear about what this meant for their business. When bank's say 'we are currently reviewing our rates in light of the RBA decision' it sounds like the decision has come out of the blue and blind sided them, which I think, makes them look incompetent. Having said that , I understand that the timing of the bank's media release also considers customer sentiment, competitive edge, yada yada…..

    Cheers
    Paul

    Profile photo of Matt_ArnoldMatt_Arnold
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    @matt_arnold
    Join Date: 2006
    Post Count: 142
    DWolfe wrote:
    The only problem with hiking up income tax is that most people who can afford a top accountant wont pay over 30% tax. The only people who will hurt will be the tradies and the like who do Saturday overtime and lose all of it to tax.

    The only way to effectively tax all citizens equally is to increase the GST… 

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