Wednesday, April 8, 2009

What planet is Terry McCrann on? we don't want another rate cut?

The oligopoly banking cartel is just making a blatant grab for the cash. For the ten year period from 1997 to November 2007 the margin the banking oligopoly could get away with charging struggling home loan customers over the official cash rate was always less than 1.82%. This was due primarily to the non bank lenders having access to funds and providing 'real' competition to the banking oligopoly. Unfortunately, now the non bank lenders and the competition they provided are gone, so the banking cartel who can source their funds at AAA sovereign guaranteed rates, have been able to increased their margin to 2.74% or nearly 1% more than they were allowed to charge prior to November 2007. You can see the figures here at infochoice; The latest cut would have the RBA Official Cash Rate at 3% , Bank Standard Variable Rate at 5.74% , a margin of 2.74% going into the banking cartels coffers. Oligopolies and monopolies should be strictly regulated
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THIS is essentially it. You are unlikely to get much more in the way of rate cuts.

Either officially from the Reserve Bank, or the pass-through from the banks themselves.

But you shouldn't want to anyway. For two reasons.

First, any further cuts - especially big ones - would mean the economy had got much, much worse.

Second, understand very clearly, what goes down will go up. Has to go up.

So every 25 points off the borrowing rate, every $100 off the monthly mortgage repayments, will be reversed at some time in the future.

towards the end of the year, we could start to watch these monthly RBA statements for the first hint of coming rate increases.
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