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Holy moly! RBA cut interest rates

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#1 Lees75

Posted 04 June 2019 - 02:38 PM

I am no economic genius. Obviously, from a personal perspective, single mum with a mortgage, an interest rate cut is great, but I am not so sure it is a great sign overall?

#2 Molondy

Posted 04 June 2019 - 02:41 PM

It was expected pretty much - I think its a sign of a slowing economy rather than a good thing but hopefully will lead to better growth down the track.

#3 jayskette

Posted 04 June 2019 - 02:46 PM

for home loans, it means nothing whatsoever.

#4 Hands Up

Posted 04 June 2019 - 02:55 PM

No surprise there, some of the credit unions etc. had already lowered them. I think the APRA changes (if they go ahead) will make more of a difference.

Basically the economy is slowing (thanks Liberals!) because of no real wage growth amongst other things. More pain to come.

#5 EsmeLennox

Posted 04 June 2019 - 02:59 PM

I wouldn't hold my breath on this being passed on to mortgage holders.

#6 ~LemonMyrtle~

Posted 04 June 2019 - 03:04 PM

Does it matter, the banks ignore it anyway! But Short term it may help some people.

I think it’s linked to slow (non existent) wages growth. Similar reasoning as to why the minimum wage went up above inflation. We need more money going round and the corporate world isn’t dishing it out. But with banks doing their own thing I’m not sure it will have the effect they’re going for. I predict more cuts before the end of the year.

75% of my mortgage is fixed, so it doesn’t affect us much.

Edited by ~LemonMyrtle~, 04 June 2019 - 03:17 PM.

#7 Caribou

Posted 04 June 2019 - 03:04 PM

View Postjayskette, on 04 June 2019 - 02:46 PM, said:

for home loans, it means nothing whatsoever.

pretty much this. The banks have never been obligated to follow RBA cuts. it means zilch. and any Liberal saying 'I strongly urge banks to pass on the cuts' is an ass of the highest order. basically playing on customers limited knowledge of how the RBA and banks work.

it would be nice if the cuts are passed onto consumers, but all its meant to do is encourage growth in the economy. so cutting a rate signals a troubled time especially this low.

think of the rates as a lever, if the economy is going too fast, up the rates, if the economy is going too slow or not growing right, cut the rates, if the economy is managing okay as it is, don't touch the lever. the lever is just something that slows and speeds up Australian economy.

#8 Lucrezia Borgia

Posted 04 June 2019 - 03:09 PM

not good news for self funded retirees i wouldn’t have thought...will they crucify the morrison govt the way they did labor i wonder?

bad news for term deposits ...may as well put it under our pillows

#9 EsmeLennox

Posted 04 June 2019 - 03:12 PM


it would be nice if the cuts are passed onto consumers

Not if you're relying on earning interest, rather than paying it.

#10 (feral)epg

Posted 04 June 2019 - 03:45 PM

View PostEsmeLennox, on 04 June 2019 - 03:12 PM, said:

Not if you're relying on earning interest, rather than paying it.

THOSE consumers will get the rate cuts.

#11 ~LemonMyrtle~

Posted 04 June 2019 - 03:48 PM

Already banks aren’t passing on the full cut.

#12 RichardParker

Posted 04 June 2019 - 04:26 PM

Is it that the chickens of the housing boom are coming home to roost?  That is, everyone is mortgaged to the hilt, but wages haven't grown, so no-one has any money to buy anything anymore, and with a softening of the property market, people are even less confident?

I only have West Wing level economics education so I may have this all wrong.

#13 Dianalynch

Posted 04 June 2019 - 04:33 PM

Slowing economy, low wage growth, underemployment, it’s not a good sign...

#14 IamzFeralz

Posted 04 June 2019 - 04:56 PM

But at least now the banks will look greedy if they try and increase mortgage rates out of cycle with excuses like “our costs are rising and gosh sorry we have to increase it you know”.

#15 MrsPuddleduck

Posted 04 June 2019 - 05:28 PM

CBA and NAB are passing it on in full. ANZ passing on 18 of the 25 basis point cut and Westpac silent as yet*.

Rate cuts are intended to make people and businesses spend more money to kick start the economy.

* Westpac have since announced they’re passing on 20 bps for owner occupiers and 35 bps for investors with interest only loans.

Edited by MrsPuddleduck, 04 June 2019 - 10:53 PM.

#16 rosie28

Posted 04 June 2019 - 05:34 PM

Our bank has just passed it on in full, so that’s nice, but it’s not a great sign for the economy. Plenty of self funded retirees will be upset.

#17 ~LemonMyrtle~

Posted 04 June 2019 - 05:35 PM

I liked this article. https://www.abc.net....ection=politics

It made me look up what quantitative easing was too.  Its funny ( as in totally not funny) that quantitative easing has had mixed results in other countries, as banks prefer to bank that money, rather than pass it on.  Sound familiar?? Is this not a similar story as to why the Liberal government's whole theory on tax cuts to businesses and helping the top end and trickle down economics doesn't work?

The whole world seems to be constantly confused and shocked about slow wage growth when profits are high and business environments are good.  Its just human nature to me. People are greedy.  Bring back the Unions. Unions and negotiated wage increases seems to have kept the economy afloat more than the right wing will admit.  You got to make money to spend money.

#18 RPM

Posted 04 June 2019 - 06:11 PM

The whole world seems to be constantly confused and shocked about slow wage growth when profits are high and business environments are good.

... This could be true of some big businesses, but profits are non-existent for small to medium businesses at the moment.  The general business environment if you aren't a bank is absolutely terrible.  My husband and I run two retail businesses and turnover is half of the previous years - customers have stopped spending.

#19 Caribou

Posted 04 June 2019 - 06:36 PM

I agree with RPM, DH and I have a business and indeed customers have stopped spending. We haven’t even needed to hire anyone to help with busy season this year.

#20 countrychic29

Posted 04 June 2019 - 07:08 PM

Same as PPs family business is tougher than ever - 20years in business mind you, profit is non existent so yes we can’t increase wages for our staff and the cycle continues.

From someone about to take on a mortgage double what I currently have the rate cut is good news as I can fix at a super low rate.

#21 EsmeLennox

Posted 04 June 2019 - 07:46 PM

View Post(feral)epg, on 04 June 2019 - 03:45 PM, said:

THOSE consumers will get the rate cuts.

Never mind...worked it out...

Edited by EsmeLennox, 04 June 2019 - 07:51 PM.

#22 Mister Mum

Posted 04 June 2019 - 07:59 PM

A serious question for those in the know:

My financial understanding is pretty limited, and I'm keen to learn more - the last thing I need is to absorb the online opinion of some media mouthpiece.

Aside from the potential impacts on the housing market, it seems there's a not-so-invisible elephant in the room that concerns me (I don't own a house nor do I plan to buy one in the near future):

I was wondering what amounts, I think, to negative interest rates will mean for a person with little to no debt, and moderate to considerable savings?

Does this mean you're paying the bank to keep your money "safe" for you while it loses value against inflation as interest rates fall?

I know that some other countries have gone into the negative figures with their interest rates but can't find what seems to be a non-biased article about the results of this.

I think this is intended to motivate people to remove savings from the bank and spend it, stimulating the economy..?

What happens if people want to withdraw their savings as cash and instead of spending some of it, choose to stash it all under their proverbial mattresses to rather than have it eaten away?  Is this what causes a bank run?

What does that mean for the economy if that were that case?  Does cash become more or less valuable in a financial recession/depression?  :shrug: :blink: :wacko:

Any opinions would be most welcome, thanks!

#23 Lucrezia Borgia

Posted 04 June 2019 - 08:24 PM

well, my - equally - limited knowledge is that with this low interest rate, cash isn’t an overly attractive option - there’s no tax benefits to a term deposit - whereas you are taxed on interest earned - albeit at 1.25% that’s not going to be much! there’s probably other options with more bang for your buck. if there’s a sudden run on the banks, the australian government will guarantee you up to $250,000.00 - so....at the danger of sounding like one of those dooms day preparation freaks (i actually don’t think this would happen ) but i wouldn’t have more than $250,000.00 in a term deposit with one bank....

#24 VVV

Posted 04 June 2019 - 08:34 PM

Anyone heard what ING are doing.... can’t find anything on their website

#25 Lifesgood

Posted 04 June 2019 - 08:42 PM

I read an article today that suggested term deposits are already earning negative interest compared with the inflation rate. You are actually better off spending your money than putting it in the bank!

This rate cut is likely to see mortgages being paid off faster rather than an increase in spending as the interest saving is greater than the inflation rate.

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