Australian Interest Rates
The following information on home loan interest rates in Australia should not be taken as financial advice. It is purely a summary of current events and personal opinion.
The summaries below provide details on home loan rates and related issues as reported in the media, and where personal commentary and opinions appear in order to stimulate discussion they are identified as such.
We also have historical interest rate information from 1959 - 2008 and current interest rates web pages.
October 08, 2008
The Reserve Bank dropped a bombshell by reducing interest rates by 1%. However the 1% will not be fully passed on by the Banks. The RBA hope this rate drop will quarantine our economy from the world wide credit crunch. I hope they are right. Other countries already have low interest rates and will have to find other ways to keep their economies slipping into depression. Currency traders interpreted the drop to be a panic move prompting a fall in the Australian dollar.
Talking to the House of Representatives economic committee, the RBA Govenor also explained what is required of the Government to control the slowing economy. He expressed concern that Australia's economy may have peaked and that changes need to be made to permit the economy to expand further. Two areas that were singled out were taxes and welfare reform. Raise the Age Pension Mr Rudd! How things have changed in a short period of time. Look at my posts from march 2008.
March , 2008
Statement by the Reserve Bank Governer - Monetary Policy
Following a decision taken by the Board at its meeting yesterday, the Bank will be operating in the money market this morning to increase the cash rate by 25 basis points, to 7.75 per cent.
For some time the Bank has been signalling that the cash rate would probably need to be moved higher during the current expansion. The decision to do so in March took into account the following main considerations:
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Melbourne Cup day 2008.
The Reserve Bank decided to lower the official cash rate by 75 basis points to 5.25 per cent. Not one of the major banks have passed on the full amount of the RBA cut, all blaming high funding costs in the wholesale money market.
Even ST GEORGE Bank only announced a cut of 62 basis points to its standard variable mortgage interest rate. The new rate for St George customers falling to 7.74 per cent, from November 14.
Reporting his Banks dilemma, St George head of retail banking Les Matheson said: “Due to the continued impacts of the global financial crisis, financial institutions are facing significantly higher costs in both the short and long term wholesale funding markets, and these much higher funding costs overall mean that we are unable to pass on the full RBA decrease of 0.75 per cent.”
“However, over the last nine weeks and including today's reduction our rates have come down by a total of 1.93 per cent meaning the current rate reduction equates to a saving of about $118 per month in repayments on an average size loan of $250,000 over a 30 year term.” He added.
Commonwealth Bank cut its variable rate by 58 basis points, Westpac, ANZ and NAB all moved as well, cutting their standard variable mortgage rate by 0.65 per cent, 0.58 per cent and 0.62 per cent respectively. AMP Banking reports that it will pass on the full 75 basis point reduction to it’s borrowers.
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