RBA slashes Rates by a full 1%

[phoonfan]

Lets hope the banks do the right thing and pass it on!

[mr smith]

Not everyone has a morgage.

[Jeeepers]

Originally Posted by phoonfan

Lets hope the banks do the right thing and pass it on!

Hahaha.... Call me a cynic, but even if they did pass some on, they would find another charge to retrieve it.

[KITBAG]

Originally Posted by Jeeepers

Hahaha.... Call me a cynic, but even if they did pass some on, they would find another charge to retrieve it.

SO TRUE

[RG]

Originally Posted by phoonfan

Lets hope the banks do the right thing and pass it on!

A full percent, bugger me that is HUGE.

The banks wont pass it all on (part of the reason for such a large cut) but I would hope that we get 2/3 to 3/4 of it.

[GasoLane]

Originally Posted by Jeeepers

Hahaha.... Call me a cynic, but even if they did pass some on, they would find another charge to retrieve it.

Your a cynic... but absolutely correct :

Oh and whilst not everyone has a mortgage 'mr smith' a lot of us have credit cards.

[4Vman]

Interesting move... i hope it doesn't backfire on them.
Watch property prices climb again.....

[mr smith]

Originally Posted by 4Vman

Interesting move... i hope it doesn't backfire on them.
Watch property prices climb again.....

Yup, and the whole revolving door of using your house as an ATM begins again. An economy built on credit, one day people have to pay up.

[4Vman]

The amount of debt people get into and the amount of reliance on credit is a significant worry IMO... too many people live beyond their means because they want everything now.. I think Banks and financial institutions need to tighten up their lending policies for the better of everyone.

[RG]

Originally Posted by 4Vman

The amount of debt people get into and the amount of reliance on credit is a significant worry IMO... too many people live beyond their means because they want everything now.. I think Banks and financial institutions need to tighten up their lending policies for the better of everyone.

This has been done. Due to the US economy the banks are finding it harder to borrow so therefore it is harder for us to borrow from the banks.

Don't ever expect to see the free and easy lending that got so many into trouble again.

[mr smith]

Totaly agree 4V, very dissapointed that the RBA has dropped rates so quick. I think its a good thing to let the housing prices settle down for a while and get people used to living without credit. This creates a much more stable environent for every one, knee jerk reactions often have the wrong outcomes.

[phoonfan]

Originally Posted by mr smith

Totaly agree 4V, very dissapointed that the RBA has dropped rates so quick. I think its a good thing to let the housing prices settle down for a while and get people used to living without credit. This creates a much more stable environent for every one, knee jerk reactions often have the wrong outcomes.

The same could be said for numerous sucessive rises, mabey they slowed things a tad too much. With oil prices driving inflation on to of that, unemployment on the rise, the pressure valve needed to be opened a tad or we were going to hit a wall! We can only hope the Banks have been burnt enough as well to change thier lending policies!

[Polyal]

Originally Posted by 4Vman

Interesting move... i hope it doesn't backfire on them.
Watch property prices climb again.....

Sweet, great when your only debt is a mortgage though. Dont utilize credit cards etc.

I too think its odd for such a large drop, maybe .5 now and .5 in a few months, atleast wait for the dust to settle.

[Yellow_Festiva]

"Aussie" John Symond thinks that they will pass on .75%.

Hope so... my loan is variable and a cut of that percentage will mean I can pay my loan off sooner.

Geeze how things can change so easily, before the cut all the experts were touting .5% with the banks to pass on at least .35-.4%

[Rodp]

When I took out my loan, I calculated my repayments at double the interest rate and budgeted on that to see if I could still afford the repayments.

How people can sleep at night with so much debt on their heads is a mystery to me. Rate rise or rate fall at the moment doesn't change my lifestyle one little bit - I don't even know what my repayments are right now since it matters little in the scheme of things. If more people made that consideration before mortgaging up to their eyeballs, we wouldn't be so far in the pooper.

[4Vman]

Originally Posted by Polyal

Sweet, great when your only debt is a mortgage though. Dont utilize credit cards etc.

I too think its odd for such a large drop, maybe .5 now and .5 in a few months, atleast wait for the dust to settle.

Yep, while i'm all for a drop i think half now and half a bit later would have been more sensible, 1% is nearly $200 a month less on the average mortgage, watch people go crazy at Auctions this weekend!!! Its probably pushed property values up 5% in one hit. Great time to be selling!!!! :

[Lynch'd]

Got to agree with what seems to be the concensus here. 1% in one hit was way too big. While its hard on everybody, I think we (as a country) needed to tough it out a bit longer for attitudes to really change. Just wait for record spending data to hit this xmas and see how wrong they got it. I think they're just setting us up for an even bigger fall in the future.

[buggerlugs]

Never had a credit card. Use a Visa Debit Card, your using YOUR money, not the banks......Don't run accounts, pay as I go, no horror bills at the end of the month....

[Scott]

Hrmmm, IMpO, 1% is too much. Yes the US let it run for too long but from what I see, Australia isn't hurting nearly enough yet. I would have liked to see rates held for 3-6 months.

[BENT_8]

OK im no financial analyst but could someone please explain how all of a sudden the RBA is willing to cut that much in one hit if we truely dont get affected by the US problems.
For months weve been told how our financial situation is much better than the rest of the world and their goings on dosn't affect us yet when the US government bails out it's banks we save instantly.
Bit much of a coincidence for mine.

[Scott]

^^^^ From news.com

ANZ chief economist Saul Eslake welcomed the massive rate cut.

"I would describe today's move as extraordinary and bold," Mr Eslake said.

"They are clearly very concerned about the financial crisis and its potential impact on global growth, on Asian economies which they specifically mention, and on commodity prices.

"They've reduced their concern about the outlook for inflation and they are obviously much more concerned than they were a month ago about the downside risks to the Australian economy."

Mr Eslake said he hoped the RBA decision would not be interpreted as panic.

[BENT_8]

Hmm the part about asian economies is interesting as i watched an abc show Sunday morning on which a financial analyst claimed China would not be the saviour it was hyped to be.
He also found it interesting that anyone could give a prediction about future outcomes as this current global breakdown is something unseen before and therefore have no previous experiences to gauge it on.

With shares values at a recent high before this collapse i imagine they are worried people will cut their losses and send prices crashing if they didn't paint a rosy picture.

[Daymoe]

That means the interest rate I'm getting from the bank in my savings account will go down too :'(

I want them to keep giving me more money, not less :(

[XR06T]

my bank didn't pass on the last cut.. if i dont see more than .75% within 2 weeks they are going to be down a customer thats for sure.

they weren't afraid to drive it up at their earliest convienence, f**kn banks..

[XD 351 Ute]

Originally Posted by Rodp

When I took out my loan, I calculated my repayments at double the interest rate and budgeted on that to see if I could still afford the repayments.

Spot on Rod, I did the same thing when I bought my house.
I'd dearly love an FG turbo or 8, and a shed, but I'm happy to wait a few more years to kick my mortgage in the guts a bit.

Ed

[Falcon Coupe]

It seems most banks are doing a 3/4%, the reserve wanted at least a half percent to customers hence the full one % reduction.

[vztrt]

I put my repayments up on purpose when rates were going up so my repayments stay the same. So if interest rates go down I just pay back more on my home loan each month. Which is good.
Apparently the last time this happened was in the early 90's and Australia had 9 1% drops and a 0.5% drop.

[balthazarr]

Originally Posted by 4Vman

... I think Banks and financial institutions need to tighten up their lending policies for the better of everyone.

Pfft... why would they bother... a tax-payer funded buyout is always a possibility. :

[jason71]

1% is a huge drop!

I'm a firm believer of not living beyond your means.

7 years ago we bought our modest 3 bedroom house out in the western suburbs
knowing full well that were getting married and having kids.

If we had taken the loan the banks were offering at the time and got the big house filled with all the best appliances
when we were both working and had no kids, we would have been in deep trouble by now!

We now have two kids aged 4 and 1, on a single income, own our car, and are doing fine.

Life couldn't be better.

[cycle myth]

mmmm....

My fear is that the huge 100 bpts is not too much too quick but that such a reaction means the RBA is trying to stop it hitting the fan.

Look out and keep low - depending on how it goes over the next month there may be a lot more.... and pain.