Discussion in 'Markets & Economies' started by fishduck, Sep 29, 2019.
Dunno what you’re on about?
Mortgage rates are at historic lows and have had cuts.
told you guys.. Westpac only pass in 0.15 .. ANZ 0.14.. noice to be with the banks...
If the banks are only passing part of the cut, and don't have to follow the RBAs benchmark, then why not go further and not cut at all? I mean, can't there be a scenario where the bank CEOs just agree (whether they had a meeting or not) not to cut since cutting affects their bottom line?
Or why not go even further and raise interest rates if the cost of the wholesale market (Australian Interbank Rate etc) is increasing? If its going to cost more to service the loan, then the rates should go up to reflect the profits banks need to sustain themselves.
I mean, its like the PM market, you have spot price and you have the market price. You could quote spot all day long, but if spot price is too low, then either no one will sell or someone will sell with a large premium.
Once again, if the banks don't have to comply with the RBA benchmark, why comply at all?
I made the point a number of times over the years on these pages that RBA’s big lever on the economy gets very much diminished below a cash rate of 2%. With big chunks of Aus banks retail funding being sourced off shore, rates that low don’t mean much. If you’re paying say 1.5% to Goldman Sachs for a huge tranche of your mortgages, how low can you cut your loan rates? The RBA essentially became irrelevant today. They’ll cut again next quarter and the banks will cut even less than they did this time. If at all.
Of course, a few politicians will do the obligatory "I'm angry banks didn't pass on the full rate cut" speech.
Will we ever see the day where politicians don't get angry all the time?
It's all a big show.
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