After a surprise interest rate rise on Melbourne Cup day, the Reserve Bank has delivered mortgage holders some relief today by deciding to keep rates on hold until at least February.
The decision comes on the back of economic data out last week showing that the growth in the Australian economy has fallen behind many of the world's advanced economies. Consumer data out last week also showed the biggest drop in retail sales since July 2009.
"Today's move is good news for mortgage holders who are adjusting to the higher rates imposed by last month's official rise coupled with the decision by several lenders to lift their own rates by quite a lot more," says Domain.com.au blogger Carolyn Boyd.
Each 0.25 per cent interest rate rise adds another $50 to the monthly cost of an average Australian mortgage. The official interest rate is now 4.75 per cent. Mortgage holders on variable interest rates are being charged a standard variable rate of about 7.83 per cent by their lenders.
Rates will now remain on hold until at least February, as the Reserve Bank takes a break in Janaury.
Tuesday, December 7, 2010
Tuesday, November 30, 2010
Reserve chief: no more rate rises for now
The man who sets our interest rates has good news for summer: we can relax. Rates are not going up again ahead of Christmas and probably not until well into the new year.
The plain message, delivered three times during his three-hour grilling by the Parliament's economics committee, appears designed to reassure shoppers, borrowers and retailers put on edge by the outsized mortgage rate increases imposed by the big four banks on top of his Melbourne Cup day lift in the cash rate of 25 basis points.
The Reserve Bank governor, Glenn Stevens, came close to defending the banks in his testimony, saying if he had to choose between ''banks with good profits and banks with no profits'' he would ''choose the former every time'', and that his board expected the banks to top up their margins when it took the decision.
Asked why the bank expected wider margins he said the members ''just read the newspapers''.
''When we were raising rates in 2007 and 2008, we raised by less than we otherwise would have. We cut by more subsequently and we have raised by less since, because of the recognition of these shifts in margins,'' Mr Stevens said.
''The question is whether all those people with a mortgage are paying seriously higher rates than they should be from an economic management point of view. What I am saying is that I do not think they are, because we pretty much offset the change in the margins.''
The governor also poured cold water on moves to increase competition in banking ahead of an announcement by the Treasurer, Wayne Swan, expected next month.
''In many areas it is probably the case that more competition is always better for consumers, but in banking more competition is good to a point - but beyond a point more competition pushes down lending standards and banks end up lending money to people who really should not get it,'' he said.
Bank margins had fattened in the last two years but were still much better than ''10 or 15 years ago''.
''We are arguing about a small backtrack a little way back up that curve,'' he told the committee.
The profits of the big four banks were ''good'' but ''many Australian corporates would be looking to earn those kinds of rates of return, not just banks''.
Asked about the outlook for interest rates, Mr Stevens said ''at the moment most commentators do not anticipate and market pricing do not anticipate any further near-term change by us for quite some time''.
''I think that is probably a reasonable position for them to have based on the information we have,'' he added.
There would probably be some more rate rises ''next year and maybe a little bit more after that'' but it was ''unlikely there will be anything from us imminently - I think that is probably a reasonable expectation of people just now''.
The Australian dollar slumped US1¢ on the governor's words to US97.16¢ as futures traders wound back their expectations of future interest rate rises, cutting the implied probability of a rate rise before May from 74 per cent to 42 per cent.
Mr Stevens said while he did not want to get into ''political debate'' Australia's government debt did not worry him at all. ''I have never felt in recent years that the size of the public debt that we have outstanding is a material problem,''he said
The plain message, delivered three times during his three-hour grilling by the Parliament's economics committee, appears designed to reassure shoppers, borrowers and retailers put on edge by the outsized mortgage rate increases imposed by the big four banks on top of his Melbourne Cup day lift in the cash rate of 25 basis points.
The Reserve Bank governor, Glenn Stevens, came close to defending the banks in his testimony, saying if he had to choose between ''banks with good profits and banks with no profits'' he would ''choose the former every time'', and that his board expected the banks to top up their margins when it took the decision.
Asked why the bank expected wider margins he said the members ''just read the newspapers''.
Advertisement: Story continues below
The extra imposts would not hurt because the Reserve Bank would be more gentle in its own decisions to compensate.''When we were raising rates in 2007 and 2008, we raised by less than we otherwise would have. We cut by more subsequently and we have raised by less since, because of the recognition of these shifts in margins,'' Mr Stevens said.
''The question is whether all those people with a mortgage are paying seriously higher rates than they should be from an economic management point of view. What I am saying is that I do not think they are, because we pretty much offset the change in the margins.''
The governor also poured cold water on moves to increase competition in banking ahead of an announcement by the Treasurer, Wayne Swan, expected next month.
''In many areas it is probably the case that more competition is always better for consumers, but in banking more competition is good to a point - but beyond a point more competition pushes down lending standards and banks end up lending money to people who really should not get it,'' he said.
Bank margins had fattened in the last two years but were still much better than ''10 or 15 years ago''.
''We are arguing about a small backtrack a little way back up that curve,'' he told the committee.
The profits of the big four banks were ''good'' but ''many Australian corporates would be looking to earn those kinds of rates of return, not just banks''.
Asked about the outlook for interest rates, Mr Stevens said ''at the moment most commentators do not anticipate and market pricing do not anticipate any further near-term change by us for quite some time''.
''I think that is probably a reasonable position for them to have based on the information we have,'' he added.
There would probably be some more rate rises ''next year and maybe a little bit more after that'' but it was ''unlikely there will be anything from us imminently - I think that is probably a reasonable expectation of people just now''.
The Australian dollar slumped US1¢ on the governor's words to US97.16¢ as futures traders wound back their expectations of future interest rate rises, cutting the implied probability of a rate rise before May from 74 per cent to 42 per cent.
Mr Stevens said while he did not want to get into ''political debate'' Australia's government debt did not worry him at all. ''I have never felt in recent years that the size of the public debt that we have outstanding is a material problem,''he said
Peter Martin ECONOMICS CORRESPONDENT
November 27, 2010Friday, November 26, 2010
NOW THIS IS LIVING!
Tuesday, November 23, 2010
Social Media Marketing
Response Real Estate has introduced a Social Media Marketing Program to assist us in providing a higher level of service to our clients.
Subscribe to:
Posts (Atom)