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There is talk of a few banks from overseas opening up branches here too, the sooner that happens the sooner the big 4 have some accountability

Unfortunately the banks only have 1 objective and thats to keep making record profits and the best way to do this is with interest rates. They suck the big one

gossipgirl wrote:Unfortunately the banks only have 1 objective and thats to keep making record profits and the best way to do this is with interest rates. They suck the big one

Every company needs to keep making "record profits" to keep up with the overall inflationary trend.
If the amount of capital tied up in any business grows and profits don't they are on the slow slide into collapse.
Profits must be seen as a percentage of the capital invested to be meaningful - criticism without that perspective is just political propaganda.

That said, it would help if no business (or government department) overpaid its executives, as that would improve profitability.

The same principle should be applied to government fiscal policies too perhaps.

you live in a fantasy land of $400,000 salaries and driving around in audis listening to bochello psyber. the average schmo wants interest rates cut and cut now. i have to feed my guts somehow, iced coffees are cheap you know. interest rate cuts now or im going on strike, **** their profits.

infinity+1 wrote:you live in a fantasy land of $400,000 salaries and driving around in audis listening to bochello psyber. the average schmo wants interest rates cut and cut now. i have to feed my guts somehow, iced coffees are cheap you know. interest rate cuts now or im going on strike, **** their profits.

I'm just saying you have to be realistic about how businesses run and create jobs.
You can't fantasise that jobs will still be there, and that the money will stay in business, if it isn't making enough to be worth the greater risk than leaving your money in a bank you know is sound.

There is no point in running a business if profit rates are lower than just leaving the money in your bank account - why bother? - and no business = no jobs.
The same applies to the availability of rental housing - if rents are well under bank account rates and the capital gain is taxed, why put up with the hassle and risk? - result, rental housing shortage.
(PS: My annual income from my Super is under $40K in this current economic climate, and my Audi is a 1995 model that I bought second-hand in 2002.)

Psyber wrote:

infinity+1 wrote:you live in a fantasy land of $400,000 salaries and driving around in audis listening to bochello psyber. the average schmo wants interest rates cut and cut now. i have to feed my guts somehow, iced coffees are cheap you know. interest rate cuts now or im going on strike, **** their profits.

I'm just saying you have to be realistic about how businesses run and create jobs.
You can't fantasise that jobs will still be there, and that the money will stay in business, if it isn't making enough to be worth the greater risk than leaving your money in a bank you know is sound.

There is no point in running a business if profit rates are lower than just leaving the money in your bank account - why bother? - and no business = no jobs.
The same applies to the availability of rental housing - if rents are well under bank account rates and the capital gain is taxed, why put up with the hassle and risk? - result, rental housing shortage.
(PS: My annual income from my Super is under $40K in this current economic climate, and my Audi is a 1995 model that I bought second-hand in 2002.)

i agree with you psyber im all for a different economic system. not communism as such but something better than capitalism which just makes every man and his dog a worker ant and a slave to the system. if you had an out of body experience and looked down upon humankind youd fair dinkum shake your head. big business has had it way to good for too long. interest rate cuts now or ill take my money out of the banks and hide it in my cupboard.

infinity+1 wrote: i agree with you psyber im all for a different economic system. not communism as such but something better than capitalism which just makes every man and his dog a worker ant and a slave to the system. if you had an out of body experience and looked down upon humankind youd fair dinkum shake your head. big business has had it way to good for too long. interest rate cuts now or ill take my money out of the banks and hide it in my cupboard.

Your money in the bank would actually do better if rates went up.
My cash deposits in my accounts are earning 5.75% whereas my shares are generating only about a 2% return on capital tied up.
It is only the hope of capital gains when the world economy stabilises that makes keeping the shares worth while.
Cash doesn't grow with capital inflation - only with interest - so you need a balance to cover both possibilities.

I guess those of us with more borrowings than deposits naturally want rates down, while those with more deposits than borrowings would be better off if they went up..

The real problem in the present system is CEO salary inflation and the instability generated by speculative share trading like short selling - selling something you don't own yet and will have to own by the due date. I also have reservations about futures trading as it, too, promotes a form of gambling in the share market. However, I do understand the impulse of manufacturers to secure future supplies of raw materials at today's (theoretically) more affordable prices.

down by 50 basis points to 3.75 % cash rate

the banks wont pass all that on, i reckon we would be lucky for it to go down by .30 tops

mighty_tiger_79 wrote:down by 50 basis points to 3.75 % cash rate

the banks wont pass all that on, i reckon we would be lucky for it to go down by .30 tops

Of course they will MT otherwise they will have to answer to Wanye Swan

scoob wrote:

mighty_tiger_79 wrote:down by 50 basis points to 3.75 % cash rate

the banks wont pass all that on, i reckon we would be lucky for it to go down by .30 tops

Of course they will MT otherwise they will have to answer to Wanye Swan

Oh I fear mr. Swan ....so tough with the banks

They will drop them accordingly.

Lot of pressure on at the moment to write new loans , can't keep going for ever with no growth on the books.

once_were_warriors wrote:They will drop them accordingly.
Lot of pressure on at the moment to write new loans , can't keep going for ever with no growth on the books.

Loan writing is now inhibited by new federal rules too.
Now the banks can only lend amounts based on your income flow being adequate to pay for them on last years figures.
They can't lend you more than that income can cover even if you have other assets you are prepared to sell to cover the loan if necessary.
That stifles investment opportunities.

I had a project in mind but couldn't launch it without a bigger loan than my previous years income covered.
The fact that I could choose, in future, to draw more than the legal minimum from my superannuation fund to cover it, or sell other assets, didn't help.
My bank manager said, "Last year we'd have said 'Sure how much do you need?' "

Psyber wrote:

once_were_warriors wrote:They will drop them accordingly.
Lot of pressure on at the moment to write new loans , can't keep going for ever with no growth on the books.

Loan writing is now inhibited by new federal rules too.
Now the banks can only lend amounts based on your income flow being adequate to pay for them on last years figures.
They can't lend you more than that income can cover even if you have other assets you are prepared to sell to cover the loan if necessary.
That stifles investment opportunities.

I had a project in mind but couldn't launch it without a bigger loan than my previous years income covered.
The fact that I could choose, in future, to draw more than the legal minimum from my superannuation fund to cover it, or sell other assets, didn't help.
My bank manager said, "Last year we'd have said 'Sure how much do you need?' "

More towards thinking that home ownership purchases would be determined by house prices,interest rates and job security. If banks don't start providing confidence that variable rates are going to rise and fall on par with the RBA cash rates , then people aren't going to be as confident in commiting to mortgages.

once_were_warriors wrote: More towards thinking that home ownership purchases would be determined by house prices,interest rates and job security. If banks don't start providing confidence that variable rates are going to rise and fall on par with the RBA cash rates , then people aren't going to be as confident in commiting to mortgages.

Bank rates have never been tied to RBA rates, though they have tended to move in the same general direction most of the time.
The idea they should be tied is a fantasy the ALP episodically runs out to curry favour with the electors when they are feeling the pinch of their fiscal "management".
Their only hope of making it happen is to own the banks, which they tried for back in the 1940s, or early 1950s, IIRC.

Psyber wrote:

once_were_warriors wrote:They will drop them accordingly.
Lot of pressure on at the moment to write new loans , can't keep going for ever with no growth on the books.

Loan writing is now inhibited by new federal rules too.
Now the banks can only lend amounts based on your income flow being adequate to pay for them on last years figures.
They can't lend you more than that income can cover even if you have other assets you are prepared to sell to cover the loan if necessary.
That stifles investment opportunities.

I had a project in mind but couldn't launch it without a bigger loan than my previous years income covered.
The fact that I could choose, in future, to draw more than the legal minimum from my superannuation fund to cover it, or sell other assets, didn't help.
My bank manager said, "Last year we'd have said 'Sure how much do you need?' "

this was in part the reason of the GFC hit, great ideas with no financial backing

james07 wrote: this was in part the reason of the GFC hit, great ideas with no financial backing

Yeah.
Sadly, I could have backed my project by drawing more income in future or selling something else, but the new rules are not flexible enough to accept that.
I wonder if this allegedly protective policy is actually aimed at forcing people to use less deductions so they and borrow when needed, and so pay more tax.

Interesting discussion on Interest Rates on ABC 891, the representative from the NAB stated that its their position that they feel the next move on rates will be a correction upwards likely in July next year with rates to flatline in the meantime, another commentator from another organisation suggested they felt that there were a further two .25% cuts on the way before Christmas?

Either way one might think that now is not the time to take up a bank offer to fix your loan for any length of time?

I have always believed in using variable interest rates instead of fixed ... whilst there may be short term pain with variable, IMO there invariably will be longer term pain on fixed.

My reasoning is that the financial institutions have to hedge their risk in their fixed rates, hence there will be a bigger expected margin for them to cover this risk.

That said, fixed rates can give an indication of where the market is heading, or more to the point where financial institutions believe the market is heading.

I agree, banks have forcasted further rate drops. Personally I thought it was a good time to fix portion of my loan at a rate 0.56% below my current variable rate (which means I'd need 3 x rate cuts of .25% to be worse off). I fixed $50k for 1 year, 2 years, & 3 years. leaving the remaining $108k at a variable rate which I can still use my offset facility against.