Interest Rate Reduction for Private Real Estate Sale Owners
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For sale by owner and private real estate sale sellers will benefit from the recent 1% real estate reduction regardless of the amount the retail banks decide to pass on. All this hype about the retail banks not passing on the full interest rate reduction is all nonsense and irrelevant to for sale by owner and private real estate sale sellers.
The Reserve Bank of Australia reduces interest rates according to a number of economic indicators. The official cash rate they stipulate is dependent on how they would like to adjust these economic indicators. They don’t have a lower (or upper) limit on what they can reduce (or increase) this cash rate to. So if banks decide to only pass on the 25% of the interest rate reduction then it simply means the Reserve Bank of Australia will reduce rates in the coming month until these economic indicators have adjusted and are reflecting what they want them to.
To all the media and in particular my local MP Malcolm Turnbull, shut up and start reporting about real issues in the Australian economy.
Comments
The major banks should be made to pass the full interest rate reduction on to consumers, they are one of the most profitable group of institutions in Australia.
T-Bone
08.10.08
9:05 am
And our banks will end up like the rest of the banks across the World, in a liquidity crisis and collapsing.
The reason our banks have been relatively safe from this crisis is that they are managed correctly meaning they are not vulnerable to the same activities which have hurt other banks.
There is no need to play the devil’s advocate when the proof is in the pudding!
Micky
08.10.08
2:13 pm
The banks are not exactly struggling given most of them made $4b+ last financial year. They are using this financial crisis as an excuse to maintain their profit forecast. Even if their profit reduced to $2b that would be fine, they are only trying to please the shareholders.
T-Bone
10.10.08
10:02 pm
Why would you risk the liquidity of the banking sector in Australia by forcing banks to provide a product which could cause them headache? The public or the government would not know fully how at risk the banks in Australia are to this crisis, as each bank would not want to devolve their financial situation to the public.
Look are all the banks which have gone bust across the world, no one expected anything until it was too late! The banks get in a whole and then try to dig themselves out and by the time the public knows it is too late.
If banks were to tell the public they were in trouble then this would make the matter worse as everyone who has deposits with that bank will redraw their money, further compounding the problem.
Let’s just leave banks to make their own decisions! Yeah keep regulating them but don’t tell them how they should price their products.
Michael
11.10.08
4:38 am
Thank god, for the guarantee the federal government has given over customer deposits in banks in Australia. Correct me if I am wrong but they have agreed to reimburse the public up to $20,000 if a bank collapses and you have funds deposited in it which are not returned to you.
If you had more than this in a bank you should be considering spreading this across numerous banks in Australia.
JaneH
11.10.08
6:45 am
Jane H, Australian banks are well financed and well regulated, we do not have the same problems as US banks.
Gavin R
11.10.08
9:06 am
Gavin R………………….I am sure many though these American and European banks were well financed and regulated as well!
Little to anyones knowledge this was not the case and I don’t think Australia is immune from this either.
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2:18 pm
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