Brian April 8, 2009

The RBA have really stuffed up here. It was obvious from the noises the banks were making that a 0.25 cut would be a waste of time. All it will do is fatten their profit margins. For me it had to be at least 0.5% or nothing this month.

Thomo April 8, 2009

Attention Banks! 0.1% to customers, 0.1% increase to broker up-front commissions, and you pocket the change. Everyone’s a winner.

Troy April 9, 2009

So here is a solution to brokers - give your business to credit unions or building societies - they are not ran as “for profit” institutions (therefore no need to not pass on rate cut in full), and they are 100% funded by their own balance sheet. No exposure to US markets, therefore cost of funds is not a factor like the majors.

Can you think of a reason to NOT use them?

I will be using them for ALL clients moving forward where at all possible

Concerned April 9, 2009

I can picture a round table with the Fat Cats from the ‘big 4′ eating takeaway and discussing how if they stay together on this one then no one bank can be singled out for their paltry pass on.

richard April 9, 2009

Ha,

The RBA just gave the big banks a free kick…the Australian public must be stupid.

richard April 9, 2009

Dear Concerned,

I can picture the round table as well….but I doubt “take away” would be on the menu….their dining room menu would offer lobsters and smoked salmon, the best rib eye steaks and rack of lamb with hand made mint sauce, gravy and the finest mustards, fresh oysters flown in from NZ that morning, and several bottles of red wine or white wine from the directors’ private cellar, finished off with Cuban cigars and a couple of ports and plenty of rollicking laughter about how stupid the public is. What do these fat cats do when they retire on 10 or so million….? Who cares.

H Schryver April 9, 2009

GE Money/AFIG decision will be made on the 20th April 2009

adam April 14, 2009

H Schryver I am getting psychic visions….GE Money…will not pass on the rate cut citing the high cost of loan funding internationally…..

Howard April 14, 2009

@ Brian
The RBA did not “stuff up”. Yes it was obvious that the banks could not afford to pass on much of a small 0.25 cut. But it didn’t just “fatten their profit margins”. It helped their profit margin recover from unacceptable low levels.

The Banks’ Cost of Fund has increased hugely. And not just from wholeslae levels - for retail deposits as well. Banks used to fund a good portion of their book at retail rates well below intebank BSBW, now most of the time they’re bidding a full 100 basis points above BBSW.

@ Thomo
It’s up to brokers to justify their business model, don’t just wish for pie-in-the-sky hand outs from the banks, they’re not charities.

@ Troy April 9, 2009
And even though Mututals are charities, they are more affected by higher cost of funds than the banks are. At least the banks can still issue wholesale 5 year funding at an all up cost around + 1.50% to swap (including the GG fee). Market forces are denying even this expensensive funding from mutuals.

@ Concerned
No need to assume collusion. As soon as one moves publically, the rest can see whats happening.

@ Richard
If the Public are “stupid”, it would be because they trust in a currency that can be inflated at will. Remember, the long term vlaue of all fiats currencies is zero - store a portion of your wealth in gold instead.

@ Adam
Bang on, and for once, they’ll be telling the truth.

Brian April 14, 2009

@ Howard, yes they did stuff up. The whole point of cutting rates is to try and stimulate the economy. If cuts are not passed on then this doesn’t happen rendering the rate cut itself useless. The banks had made it clear they would not be passing this cut in in full (although I’m confident they will manage it for savers). Therefore 25bps would be a waste of time and so it has been proved.

I don’t see any major Australian banks with “unacceptable low levels” of profit at the moment in spite of the economic turmoil. In fact they are benefitting from the GFC as their competition diminishes. All that and the govt are guaranteeing their deposits too. Which of them do you work for by the way?

adam April 16, 2009

Resimac reduced rate by .10%

Ivi May 12, 2009

For H Schryver and Adam:
A few days back upon anticipating the arrival of my stimulus cheque in the mail I got excited when a letter resembling to this arrived.

To my surprise it was from GE stating that they were cutting the interest rate by 0.1%! Whoopee Doo! I wasn’t even expecting it!! Thank God I settled with St George this month on a variable of 5.07% comparing to GE at 7.82% and luckily I managed to do it all before the end of May as they waived the DAF fee as agreed in their previous communication in Feb!!

Goodbye and good riddance GE!!