Interest Rates/Aust economy discussion

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Interest Rates/Aust economy discussion

Postby mighty_tiger_79 » Tue Oct 06, 2009 4:10 pm

As expected interest rates go up by 25 points.

from adelaidenow

UPDATED: THE Reserve Bank has squeezed the economic brake with a cash rate rise of 25 basis points to 3.25 per cent.

This marks the first time since April that the central bank has increased its rate.

The market had priced in better-than-even odds that the rate would be increased today after strong ANZ job ads figures were released yesterday.

A 25 basis point increase to the official rate adds about $45 a month to a $300,000, 25-year home, according to comparison website RateCity.

Australia is now the second country in the world, after Israel, to begin tightening its monetary policy.

Reserve Bank Governor Glenn Stevens has called Australia's 3 per cent official cash rate an "emergency" level rate.

This is likely to be the first of many increases that the Reserve Bank will make as the economy continues to recover.

One leading economist is predicting that the official cash rate is likely to rise to four or 4.5 per cent by the end of next year.

The global financial crisis was "almost if not completely over"', and most parts of the economy no longer needed the support of very low interest rates, Grattan Institute economist Saul Eslake said earlier today.

If rates were left too low for too long, it could fuel a bubble in housing prices, he told ABC News


RBA says time to lessen stimulusArticle from: Font size: Decrease Increase Email article: Email Print article: Print Submit comment: Submit comment MEREDITH BOOTH
October 06, 2009 01:30pm
THE Reserve Bank has lifted the official cash rate 25 basis points to 3.25 per cent with governor Glenn Stevens confident of economic recovery.

In his statement for the RBA Board's decision today, Mr Stevens said forecasts for economic recover were being revised higher.

He said the RBA Board’s view was that it is was now "prudent to begin gradually lessening the stimulus provided by monetary policy. ''

"This will work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead. ''

Looking to Australia's economy, Mr Stevens said: "prospects for Australia’s Asian trading partners appear to be noticeably better. Growth in China has been very strong, which is having a significant impact on other economies in the region and in commodity markets''.

"Economic conditions in Australia have been stronger than expected and measures of confidence have recovered.

"Unemployment has not risen as far as had been expected. The weaker demand for labour over the past year or so nonetheless has seen a moderation in labour costs. Helped by this and the earlier fall in energy and commodity prices, inflation has been declining, though measures of underlying inflation remained higher than the target on the latest reading. Underlying inflation should continue to moderate in the near term, but now will probably not fall as far as earlier thought,'' he said.

He said interest rates for home borrowers on fixed-rate loans had already risen as markets anticipated a higher level of the cash rate.

"In late 2008 and early 2009, the cash rate was lowered quickly, to a very low level, in expectation of very weak economic conditions and a recognition that considerable downside risks existed.

"That basis for such a low interest rate setting has now passed, however. With growth likely to be close to trend over the year ahead, inflation close to target and the risk of serious economic contraction in Australia now having passed,'' he said.

He said the RBA Board’s view was that it is was now "prudent to begin gradually lessening the stimulus provided by monetary policy. ''
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Re: INTEREST RATES go up

Postby Sploosh » Tue Oct 06, 2009 4:53 pm

The banks, of course, who need weeks of meetings before they can put rates down, and recently only "partially" put rates down will be able to suddenly and magically raise them immediately the full .25%. No "long, in-depth" meetings will be required. Banks are a necessary part of society, sadly, but I hate the way they just blatantly rip off their customers.
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Re: INTEREST RATES go up

Postby Psyber » Tue Oct 06, 2009 6:04 pm

Sploosh wrote:The banks, of course, who need weeks of meetings before they can put rates down, and recently only "partially" put rates down will be able to suddenly and magically raise them immediately the full .25%. No "long, in-depth" meetings will be required. Banks are a necessary part of society, sadly, but I hate the way they just blatantly rip off their customers.
Hey you're criticising my primary source of income - rates up, income up, dividends up! :D
Seriously, I do believe bank rates should in general move up and down with the base rate, unless they can put up a convincing case to do otherwise - like covering other unexpected losses and expenditures for long enough to remain viable. Of course they are private companies and can set any rates and fees they like, and their customers should be able to choose to take their business elsewhere.

Those who sign loan contracts with exit fees to get initial and temporary concessions have exercised that choice and take their chances in doing so.
It is a gamble like going for fixed rate loans - though that looks a good bet right now..
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Re: INTEREST RATES go up

Postby mighty_tiger_79 » Tue Oct 06, 2009 6:28 pm

i heard that you should go for a fixed rate if you believe the current variable rate will increase by 2%, and by looking at the figures that they are giving in the article, fixed could be the way to go, for perhaps 50% even
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Re: INTEREST RATES go up

Postby Psyber » Tue Oct 06, 2009 6:36 pm

mighty_tiger_79 wrote:i heard that you should go for a fixed rate if you believe the current variable rate will increase by 2%, and by looking at the figures that they are giving in the article, fixed could be the way to go, for perhaps 50% even
Yes, just bear in mind that if the banks are anticipating a series of rises they will set higher fixed rates to offer, so you need to get in early.
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Re: INTEREST RATES go up

Postby Blacky » Tue Oct 06, 2009 7:45 pm

bloody labor party :roll: :roll:
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Re: INTEREST RATES go up

Postby southee » Tue Oct 06, 2009 8:16 pm

There goes the $900.00!!!!!

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Re: INTEREST RATES go up

Postby RustyCage » Tue Oct 06, 2009 8:37 pm

People seriously can't have expected rates to stay as they were for ever! Of course they were going to go up again, was only a matter of time.
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Re: INTEREST RATES go up

Postby mighty_tiger_79 » Wed Oct 07, 2009 5:06 am

pafc1870 wrote:People seriously can't have expected rates to stay as they were for ever! Of course they were going to go up again, was only a matter of time.


i agree, they were never ever going to stay as low as they have been.

i expect that they will go back up to around 5% possibly even 6% by xmas 2011
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Re: INTEREST RATES go up

Postby mypaddock » Wed Oct 07, 2009 7:49 am

Psyber wrote:
mighty_tiger_79 wrote:i heard that you should go for a fixed rate if you believe the current variable rate will increase by 2%, and by looking at the figures that they are giving in the article, fixed could be the way to go, for perhaps 50% even
Yes, just bear in mind that if the banks are anticipating a series of rises they will set higher fixed rates to offer, so you need to get in early.


If you were going to fix you would/should have done it about 6ish months ago when banks were offering under 6%. The fixed rates that are being offered now (around 8%) aren't worth it.
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Re: INTEREST RATES go up

Postby Bully » Wed Oct 07, 2009 8:30 am

was going to happen
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Re: INTEREST RATES go up

Postby mighty_tiger_79 » Wed Oct 07, 2009 1:51 pm

mypaddock wrote:
Psyber wrote:
mighty_tiger_79 wrote:i heard that you should go for a fixed rate if you believe the current variable rate will increase by 2%, and by looking at the figures that they are giving in the article, fixed could be the way to go, for perhaps 50% even
Yes, just bear in mind that if the banks are anticipating a series of rises they will set higher fixed rates to offer, so you need to get in early.


If you were going to fix you would/should have done it about 6ish months ago when banks were offering under 6%. The fixed rates that are being offered now (around 8%) aren't worth it.


can still get fixed for under 7%
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Re: INTEREST RATES go up

Postby mal » Wed Oct 07, 2009 8:14 pm

Having worked for a brief period in lending, I will only offer one bit of advice
Dont get overconfident for the fixed rates lock in
The Banks and Lending Insitutions dont neccessarly offer you fix rates becoz they are Mr or Mrs nice guys
They offer fixed rates becoz it works out more productive in the long run for the lenders more often than not


I predict Interest rates will prob rise to about 1-2 % more in 12-18 months as the Econmoy strengthens, than flatten out

go with the flo
Its more fun staying on the variables, fixed is not exciting

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Re: INTEREST RATES go up

Postby dedja » Tue Nov 03, 2009 11:40 pm

up another 0.25%

feels like we've been in a game of snakes and ladders in the last 18 months ...
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Re: INTEREST RATES go up

Postby Dutchy » Wed Nov 04, 2009 9:40 am

Fixed rates already have the next 12 months of predicted increases built into them...unless you absolutely need to know exactly what your repayments need to be for the next X years dont fix is my advice
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Re: INTEREST RATES go up

Postby dedja » Wed Nov 04, 2009 10:14 am

Dutchy wrote:Fixed rates already have the next 12 months of predicted increases built into them...unless you absolutely need to know exactly what your repayments need to be for the next X years dont fix is my advice


Agreed, I've never had a fixed rate ... You know the rate will have extra margin incorporated into it and then there's little flexibility to change later.

I just wish people would stop bleating when they get caught out with fixed rates, they can't have it both ways! ;)
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Re: INTEREST RATES go up

Postby devilsadvocate » Tue Feb 02, 2010 3:48 pm

BUMP :lol:

Excellent news today that interest rates will remain on hold.

Bookies had stopped taking bets on a rate rise, as it was considered a sure thing that rates would go up today.

This is brilliant - saves me nearly $90 a month!
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Re: INTEREST RATES go up

Postby mighty_tiger_79 » Tue Feb 02, 2010 3:58 pm

handy bump that!!!!!!!

i thought it would go up.

but with it not going up now, is there a chance of a higher jump in the future?????
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Re: INTEREST RATES go up

Postby devilsadvocate » Tue Feb 02, 2010 4:05 pm

I was expecting an increase too.

I'd say there will definitely be another 3-4 increases this year. Not necessarily a bigger one, but certainly multiples. I'd be betting on a .25% increase next month without doubt.
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Re: INTEREST RATES go up

Postby dedja » Wed Feb 03, 2010 4:14 am

LOL, just saw this ... http://www.adelaidenow.com.au/bank-empl ... 5826140121 :lol:

THE announcement that the Reserve Bank had put interest rate rises on hold attracted even more attention during a live Seven News broadcast yesterday when a Macquarie Bank staffer was seen viewing pictures of nude women on his computer. While broker Martin Lakos was updating Seven newsreader Chris Bath on the rates news, a colleague in the background was seen opening three pictures on his screen.

The bank released a statement last night, saying: "Macquarie has strict policies in place surrounding the use of technology and the issue arising from today's live cross on Seven News is being dealt with internally."


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