As the official cash rate goes lower and lower, and lenders are forced to operate on ever finer margins, a number of smaller lenders are feeling the pressure. Of the 78 mortgage lenders in the Infochoice.com.au database that cut their standard variable rates in August, in response to the Reserve Bank's 25 basis point reduction in the cash rate, eight cut their rates by less than 25 points.
All were small financial institutions whose rates are well below those of the majors. All of them have been able to maintain their pricing advantage over the majors following the latest round of cuts, but it is clear some lenders are facing margin pressure.
Bankmecu has cut its standard variable rate by 15 basis points, from 5.79 per cent to 5.29 per cent.
Unicredit has also cut its rate by 15 basis points, from 5.4 per cent to 5.25 per cent. Goldfields Money cut its rate by 17 basis points, from 5.42 per cent to 5.25 per cent.
CUA, Teachers Mutual Bank, Police Bank, Macquarie Credit Union and Bankstown Credit Union all cut their rates by 20 basis points. All are still offering cheaper rates than the Big Four.
At the other end of the scale, Westpac cuts its rates by 28 basis points, Homeloans Ltd by 27 bps and loans.com.au by 26 bps.
Among the Big Four banks, ANZ and National Australia Bank have standard variable rates of 5.88 per cent, Commonwealth Bank's rate is 5.9 per cent and Westpac's is 5.98 per cent.
The lowest advertised standard variable rate in the market is 4.49 per cent, offered by loans.com.au. UBank's rate is 4.62 per cent, Pacific Mortgage Group's is 4.77 per cent, My Mortgage Freedom's is 4.83 per cent, State Custodians' is 4.84 per cent, iMortgage's is 4.89 and eMoney's is 4.9 per cent.
RBA will cut tomoz. It seems the only way to make money in the world is to flip houses. In then mean time im going fishing.
As my optimism gland continue to pump the good stuff, I take some joy from the fact that finally there are some signs that people are seriously questioning not only the decisions of the RBA but also its charter and the way that monetary policy has been conducted over the last 15-20 years in particular.
When the RBA was ‘given’ its independence back in the 1990s the general understanding was that it would use it to ‘take away the punch bowl’ when governments over heated the economy with their pork programs.
There was little appreciation that in the absence of inflation the RBA would use monetary policy and the debt creation activities of the private banks to ‘stimulate demand’ and drive economic activity.
Over the last 15-20 year the RBA and its yanking of the interest lever during a period of low inflation has hooked the economy on debt and given the private banking sector a headlock on the economy.
Let’s be quite clear.
What the RBA does is manipulate the economy by altering the degree of subsidy given to the price of debt products sold by the private banks.
When they drive rates down, the subsidy is increased and not surprisingly the demand for Debt Products rise.
(Of course when rates rise the price of Debt products rise and the demand for them fall.)
And why does the RBA feel entitled to fiddle with the price of debt?
Because it believes that the economy is all about the confidence fairy and when people are not borrowing it is because they are too sad and stupid to know what is good for them and sending false signals via interest rates to cheer them up is just what the doctor ordered.
Even in the current situation when everyone is chock full of debt the RBA still believes the ‘confidence fairy’ is the problem and even cheaper debt is the cure.
Why limit themselves to interest rates when it comes to twerking the confidence fairy with lower debt prices?
Cutting the price of land (or simply removing a lot of the costs due to supply manipulation and regulation) would be much more effective than just cutting the price of the debt used to buy land.
No surprise that while the RBA is holding down interest rates there has been little if any deleveraging. Even though some people are paying down their loans. There are plenty of others (small time investors) who are buying fresh debt.
Of course when the RBA is forcing people to subsidise the price of Debt products the interest from locals is not quite what demand requires and the gap is filled by the issue of private bank and government IOU’s to foreign investors.
The catch of course is that when foreigners are doing the saving they own or have claims on our assets and future income and our exchange rate is higher than it would otherwise be.
Brilliant stuff
It is time to end the gross abuse of monetary policy and sharply limit the role of the RBA to what was originally intended.
“A monetary handbrake for when the economy overheats”
But don’t expect to hear this from the army of economists who are paid by the private banks to offer the public their ‘free advice’ and commentary on how to run the economy.
That would be like asking Colonel Sanders whether we should cut down our intake of Fried Chicken.
As my optimism gland continue to pump the good stuff, I take some joy from the fact that finally there are some signs that people are seriously questioning not only the decisions of the RBA but also its charter and the way that monetary policy has been conducted over the last 15-20 years in particular.
When the RBA was ‘given’ its independence back in the 1990s the general understanding was that it would use it to ‘take away the punch bowl’ when governments over heated the economy with their pork programs.
There was little appreciation that in the absence of inflation the RBA would use monetary policy and the debt creation activities of the private banks to ‘stimulate demand’ and drive economic activity.
Over the last 15-20 year the RBA and its yanking of the interest lever during a period of low inflation has hooked the economy on debt and given the private banking sector a headlock on the economy.
Let’s be quite clear.
What the RBA does is manipulate the economy by altering the degree of subsidy given to the price of debt products sold by the private banks.
When they drive rates down, the subsidy is increased and not surprisingly the demand for Debt Products rise.
(Of course when rates rise the price of Debt products rise and the demand for them fall.)
And why does the RBA feel entitled to fiddle with the price of debt?
Because it believes that the economy is all about the confidence fairy and when people are not borrowing it is because they are too sad and stupid to know what is good for them and sending false signals via interest rates to cheer them up is just what the doctor ordered.
Even in the current situation when everyone is chock full of debt the RBA still believes the ‘confidence fairy’ is the problem and even cheaper debt is the cure.
Why limit themselves to interest rates when it comes to twerking the confidence fairy with lower debt prices?
Cutting the price of land (or simply removing a lot of the costs due to supply manipulation and regulation) would be much more effective than just cutting the price of the debt used to buy land.
No surprise that while the RBA is holding down interest rates there has been little if any deleveraging. Even though some people are paying down their loans. There are plenty of others (small time investors) who are buying fresh debt.
Of course when the RBA is forcing people to subsidise the price of Debt products the interest from locals is not quite what demand requires and the gap is filled by the issue of private bank and government IOU’s to foreign investors.
The catch of course is that when foreigners are doing the saving they own or have claims on our assets and future income and our exchange rate is higher than it would otherwise be.
Brilliant stuff
It is time to end the gross abuse of monetary policy and sharply limit the role of the RBA to what was originally intended.
“A monetary handbrake for when the economy overheats”
But don’t expect to hear this from the army of economists who are paid by the private banks to offer the public their ‘free advice’ and commentary on how to run the economy.
That would be like asking Colonel Sanders whether we should cut down our intake of Fried Chicken.
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