Rising Interest Rates and a Rising Dollar - Cruel!

[Mark351]

Thanks to the RBA's announcement that demonstrates strength in the economy, the dollar has just hit parity again, and I'd love to go nuts on lmctruck.com and summitracing.com. But thanks to the CBA, I'm going to be paying even more back on my mortgage on the house we just bought, and the current place which we're keeping and renting.

Very cruel but that's how it goes I suppose.

[snappy]

Yeah the CBA raised there's in record time , Probly to keep them on track for more record profits .
But that capitalism i suppose but it sure makes me wonder when is enough enough

[WMD351]

You can also take into account the fact that the US fed reserve are considered almost certain to do some more "quantitative easing" this week. In other words, they're just going to print more money and devalue their own greenback in the process.

[Raptor]

So you'll have 2 houses but still feel hard done by Mark?

[Mark351]

Originally Posted by Raptor

So you'll have 2 houses but still feel hard done by Mark?

2 mortgages technically, and I don't feel hard done by - it's a bed I made, happy to sleep in it. Would be nice to take more advantage of the better dollar without the added repayment burden, that's all.

[bingoTE50]

I just sent the Comm Bank a complaint about their actions,made me feel better...pr....ks.

[Jason[98.EL]]

Originally Posted by bingoTE50

I just sent the Comm Bank a complaint about their actions,made me feel better...pr....ks.

Id put $100 on the fact that it would have done jack

The bank's dont give 2 hoots about the average punter

Jason

[Mechan1k]

At least the interest rates aren't what they used to be like ... and really it's not that much to complain about ... I'd whinge though if the rates were back around teens again.

[XR Martin]

Originally Posted by Mechan1k

At least the interest rates aren't what they used to be like ... and really it's not that much to complain about ... I'd whinge though if the rates were back around teens again.

Err house prices arnt what they used to be either.....

Id rather pay 15% on $80k like my mother did, than 7% on $400k+ that im paying.

[Deech]

Originally Posted by XR6 Martin

Err house prices arnt what they used to be either.....

Id rather pay 15% on $80k like my mother did, than 7% on $400k+ that im paying.

Agree 100%
I'd also rather be saving a deposit while it's earning roughly that percentage in interest and/or paying a mortgage, knowing that the next move in interest rates is probably downward. Oh, and rising interest rates to an extent puts downward pressure on house prices, reducing the chance that you'll find yourself paying off a colossal principle on rates that have doubled during the mortgage's lifetime. Then there's the increased probability you'll find yourself paying off a laughable principle at rates that have since halved.

Originally Posted by Resurrection

Great news for us who are fiscally responsible.

While I don't agree with the wording, I definitely agree that rising interest rates aren't universally bad. As a potential first home buyer, I'm eagerly awaiting a few more rises.

Everything's a two-way street.

[irish2]

The only way to make a difference to an organisation is to vote with your feet.

[vztrt]

Originally Posted by irish2

The only way to make a difference to an organisation is to vote with your feet.

Pretty much what I'll be doing. Been with the CBA for a long long time, time to move all my money out of there.

Originally Posted by dannyhilton

The opposition want to try and monitor the banks more along with adding more regulations in regards to fees, I say let your money do the walking. The big four are all about the money, their money, and while they're secure in times like a recession, I say go the smaller banks or credit unions. You get treated better and their rates and fees are much nicer on the bank balance.

The only way to encourage competition is to give the competition a go, then the big four will have no choice but to sharpen up their pencils. Good luck with CBA matey, friends are with them and it's getting tighter, but as indicated, not as bad as a few years ago or the early 90's *cringes*

Unfortunately the smaller players got destroyed during the GFC as the government didn't cover their butts as they did the big 4. But I agree more government regulation would be a very stupid thing to do.

Originally Posted by Resurrection

Great news for us who are fiscally responsible.

So paying more interest is great for people that are fiscally responsible? Best you go speed through some speed cameras as your fiscally responsible!!

This rate rise doesn't bother me financially, still not impressed by CBA's actions.

[Yellow_Festiva]

Originally Posted by vztrt

This rate rise doesn't bother me financially, still not impressed by CBA's actions.

Pretty much sums up my position on the matter.

The government says they have no control over the reserve bank, which may be true to an extent.

How bout they create their own bank, offering variable rates 1% above the reserve, and sell it through an established network of offices like centerlink or medicare etc?

Wonder if Comm bank would have made such a move if there was some real competition.

[FPV8U]

Originally Posted by Yellow_Festiva

How bout they create their own bank, offering variable rates 1% above the reserve, and sell it through an established network of offices like centerlink or medicare etc?

That sounds nice, can they have it ready in just over 4 years when my house will be coming off a fixed rate?

[irish2]

Originally Posted by vztrt

Unfortunately the smaller players got destroyed during the GFC as the government didn't cover their butts as they did the big 4. But I agree more government regulation would be a very stupid thing to do.

Exactly what the big banks wanted you to believe. All building societies and Credit unions were covered by the 'Deposit Guarantee'.

[dannyhilton]

Originally Posted by vztrt

Unfortunately the smaller players got destroyed during the GFC as the government didn't cover their butts as they did the big 4. But I agree more government regulation would be a very stupid thing to do.

I know this is the case in Europe, but I'm not aware of any banks or credit unions disappearing post 2008? Suncorp is still here, Bank West is alive, HSBC, Citbank, BOQ and many more along with various credit unions are still here?

At the end of the day ANZ, Westpac, CBA and NAB are a business, and they are here to make money. Plain and simple. There are some great deals about people, don't be afraid to shop around.

[vztrt]

Originally Posted by dannyhilton

I know this is the case in Europe, but I'm not aware of any banks or credit unions disappearing post 2008? Suncorp is still here, Bank West is alive, HSBC, Citbank, BOQ and many more along with various credit unions are still here?

At the end of the day ANZ, Westpac, CBA and NAB are a business, and they are here to make money. Plain and simple. There are some great deals about people, don't be afraid to shop around.

AFAI understood the support wasn't all that good so if you needed cash during the GFC the big 4 were really the only way to go.

I also know a few big credit unions got bought out.

[irish2]

Originally Posted by vztrt

AFAI understood the support wasn't all that good so if you needed cash during the GFC the big 4 were really the only way to go.

I also know a few big credit unions got bought out.

Credit unions gernerally 'merge'. They are owned by their members. Each member holds an equal 'share'. I had no trouble getting a home loan from a credit union during the GFC. Better rates than the big 4, no fees, free offset account, unlimited withdrawals.

[dannyhilton]

The opposition want to try and monitor the banks more along with adding more regulations in regards to fees, I say let your money do the walking. The big four are all about the money, their money, and while they're secure in times like a recession, I say go the smaller banks or credit unions. You get treated better and their rates and fees are much nicer on the bank balance.

The only way to encourage competition is to give the competition a go, then the big four will have no choice but to sharpen up their pencils. Good luck with CBA matey, friends are with them and it's getting tighter, but as indicated, not as bad as a few years ago or the early 90's *cringes*

[Resurrection]

Great news for us who are fiscally responsible.

[Iggypoppin']

Originally Posted by Resurrection

Great news for us who are fiscally responsible.

Are you implying that everybody who has a complaint about interest rate rises is fiscally irresponsible? If so, I think you need to realize that not everybody can determine the way things will go in years to come. It is unfair to assume people here are not responsible, as I'm sure they are, maybe they feel the pinch once a month instead of every 6 months?? It does happen if your mortgage jumps up suddenly, despite budgeting for it or not.

[oranpark addict]

Originally Posted by Resurrection

Great news for us who are fiscally responsible.

That is one of the most stupid comments I've seen

[Revolver]

Originally Posted by Resurrection

Great news for us who are fiscally responsible.

Yep, with that statement, it's obvious you don't know the value of a "dollar".

Every interest rate rise attributes to loanee's paying more. Now for astute investors (a rule of thumb for any one who is borrowing to invest or buy) they will account for up to & including a 12% interest rate. However every dollar that has to go towards loan payments is one less dollar that can be invested (as I do) somewhere else to make more money. Which sounds better to you?

BTW it has nothing to do with the government, reserve bank, banks or ACCC.

Its to do with all of us. Everytime you have over money for a product or service (whether it is a packet of mints, or a brand new Aston Martin) it is calculated into inflation. I've also heard rumours that whenever you swipe a credit card its calculated as twice that amount in inflation against if you had just handed over cash........ So the more you spend (whether it be essential for survival, or total luxury) the more inflation rises. Simple.

Which I might add is yet to be substantiated or dis-proven. but I will find out when I have time to fully research the subject.

[RedHotGT]

This issue 'should' really interest (pardon the pun) everyone.

I listened to the Retail Funds manager on 3AW this morning, and was very interested (and concerned) with the answers.

I understand that the government does not run the banks, nor does it have the power to enforce any rules, and make them change the way they run the business.

What annoys me - is that we live in a day and age that we MUST use a bank. Whether you like it or not - we ultimately use the Big 4 banks either directly or indirectly.

Commonwealth bank's most recent profit = over $6billion. The other 4 banks will be the same or similar. Commbank was up 42% (which is a huge gain - but remember they had a bad year last year... )... So how much profit is enough? The answer is that its never enough...

Where the concern should be isn't actually this year, or the larger interest rate hike that the commbank (and surely others) have slapped on.

It will be next year that we should be worried... when the shareholders expect another great year... Because at the end of the day - banks are really in it to make money for the shareholders (and themselves)...

So next financial year... when the profits are 'only' $5billion - they won't have made enough to keep shareholders happy (share price drops) and executives start getting sacked (million dollar payouts)...

OR

The banks ensure that they will exceed this years $6bil profit - to make the shareholders happy, and gauge us some more...

Sadly with these events, they will snowball... each year being worse than the last... and another interesting thing that was said in the interview this morning was that Commonwealth bank has to get money from overseas... because Australians don't deposit enough money into Commbank... (doesn't that mean that we're obviously struggling to save - borrowing more - and slowly getting deeper and deeper into trouble as individuals??)

I suppose the only thing you can do to make a positive out of ANY of this is - buy shares in the big 4 banks... because you can be sure that banks that are unrestricted by government will always turn out positives for shareholders...

Theres my 2 cents... for what its worth...
I know i'll continue to make my mortgage repayments on my modest house - until such time comes as the houses in the next tier/bracket become more affordable by an increased rate of people who hit the wall and can't afford their homes...

[fmc351]

Apparently the market will sort it. Im not sure what said market was doing for the past however long, but apparently its on the job now.


/sarcasm

[Dr Jekkyl]

Originally Posted by fmc351

Apparently the market will sort it. Im not sure what said market was doing for the past however long, but apparently its on the job now.


/sarcasm

Indeed! And don't any of you communists question it!

You're not a communist are you?

[fmc351]

Originally Posted by Dr Jekkyl

Indeed! And don't any of you communists question it!

You're not a communist are you?

[insert word here that is not allowed] that. Nah, I couldnt be happy in a society like that. But Im also smart enough to know that no matter how much money I make, the lowest common denominator effects my life too. Thus I believe in social medicine, education, and regulation of any industry that has demonstrated it cant be trusted. Additionally, anything like airlines re: maintenance and a few others too.

Laissez Fares capitalism is just as bad/evil as communism IMO. Big government is bad, but small government could be worse.

[Scott]

It is cruel... just at the time we were about to spend a heap of money offshore the RBA makes sure we spend it here...

I'm starting to look very seriously at offloading my properties and either renting or buying a cheaper place with no mortgage - the plan being to be ready to jump back in if prices do suffer.

It's so hard to be sure at the moment - rates could continue to rise (though unlikely to be too severe before a correction) or they could come crashing down again. So many things to consider in either scenario.

One thing is certain, nothing is certain.

[rodderz]

Banks make money whether times are either good or bad, it's no skin off their nose.

The famous Rothchild family, a prominant English-Jewish family who are amongst the richest in the world, funded both the English-Coalition as well as Nazi Germany during WW2....how bad is that. But it's all money to them

[divine_afg]

CBA, WestPac and NAB where offering Very Competitive Interest on their Deposit accounts during GFC and again when government announced FHOG they Raise Funding to Capitalise on FHO Mortgage Market. ANZ is the one Position Really Well ATM and although they facing pinch aswell its not as much as the other 3 becuase it didn't follow on the 3s foot step and are well position.

Now after time... things in overseas money market are still volatile therefore Banks ( the 3 in particular ) need to raise Rates more than RBA to Balance and keep them Profitable. Banks are Business, Money Making Business and they will adapt to times.
They advertised higher interest rates for deposit accounts to lend money now they will make that money at expense of Mortgagees.

Its Vicious Cycle unless overseas funding rate and sentiment doesn't ease further the banks will have to pass on rates. I think the big 4 didn't expect RBA to raise rates very soon. Australia was the first developing country to raise rates while others were.. still suffering.

What I particularly wonder is whether the big 4 will cut rates outside the RBA, when the overseas funding coditions improve.