Official Interest Rates Now 6%

[CSP]

The RBA has shocked everyone by lowering official interest rates a full 100 basis points, down to 6%.

In my opinion, a VERY smart decision as they know the banks can't afford to pass on the full cut but still want a decent cut to be passed on to the average mortgage holder.

Good job RBA!

[Bravotwozero]

rofl @ banks unable to afford a cut.

[CSP]

rofl @ banks unable to afford a cut.

We need our banks to keep posting billion dollar profits... If they don't, we could see a repeat of the massive corporate collapses of Wall Street. People need to start understanding that a seriously strong, and profitable financial sector is something that will actually insulate us from the global recession that is looming.

[Cursed CX8]

HOME LOAN FTW!!! hahaha

[minux]

HOME LOAN FTW!!! hahaha

Chances are banks wont pass on any of these cuts, at most maybe .25%

[Bravotwozero]

We need our banks to keep posting billion dollar profits... If they don't, we could see a repeat of the massive corporate collapses of Wall Street. People need to start understanding that a seriously strong, and profitable financial sector is something that will actually insulate us from the global recession that is looming.

Why did they callapse? Poor lending practices perhaps?
And something tell me the days of easy credit will soon be over. There are going to be a lot of ****ed off bogans who can't get that new plasma now.

[CSP]

Why did they callapse? Poor lending practices perhaps?

That was certainly part of it. Another part of it was failing to maintain enough of a profit margin...

[jules]

this is a dangerous game they're playing. cutting by 1% is almost unprecedented. i hope they know what they're doing. basically they're admitting the economy is fubar.

[minux]

And something tell me the days of easy credit will soon be over. There are going to be a lot of ****ed off bogans who can't get that new plasma now.

They should be over, i think it has become to easy for people to just buy stuff on credit.

I have no issue with credit, but there needs to be laws in place that limits credit amounts to incomes eg if you earn 50k a year maximum credit limit on a card is 5%, if you want a car loan then you must have at least 33% of your weekly income free of the repayment value. So lets say you earn $300(after tax) a week(1300 month average), you must have more than $338 in non outgoing expenditure on a monthly basis. So effectivley you could get a loan for say 6k. This way people have spare cash, the banks are almost guaranteed for people to not default and everyone is happy.

I probably need to tinker with my system a bit, but effectivley you cannot borrow more than 33% of your total net income for personal loans.

[ProphetVX]

this is a dangerous game they're playing. cutting by 1% is almost unprecedented. i hope they know what they're doing. basically they're admitting the economy is fubar.

There's no need to admit it. It's common knowledge.

Such a cut needed to be made, the US market has crashed harder than anyone could have predicted, our markets are closely tied to the US, we need to promote spending quick smart or we'll hit rock bottom just as hard.

[jules]

we need to promote spending quick smart or we'll hit rock bottom just as hard.

the last surveys i saw suggested australians were continuing to spend beyond their means, despite the rate rises.

i know there is some recent data to suggest the economy is slowing, which is what the RBA is clearly predicting, but if it turns out they've got it wrong, there can be serious repercussions.

[TVR-190]

I agree with CSP, strangely...

but yes we dont want to get f****d over like the U.S

[minux]

There's no need to admit it. It's common knowledge.

Such a cut needed to be made, the US market has crashed harder than anyone could have predicted, our markets are closely tied to the US, we need to promote spending quick smart or we'll hit rock bottom just as hard.

Spending more is what got the US to where it is now and where Australia could head, too much money being handed out vs too little coming back when rates rise.

We need to slow spending to limit it within peoples needs, currently on average Australians are spending more than they have, reducing interest rates will just make things worse. If anything rates should stay steady and keep spending within means and hopefully pull everyone back into line. Only then can we start to pull interest rates back to a normal safe position.

[jules]

We need to slow spending to limit it within peoples needs, currently on average Australians are spending more than they have, reducing interest rates will just make things worse.

aside from the risk of default and foreclosure on loans, the risk of growth in the rate of inflation can cause havoc with the economy. it's why millions (well, lots) of south americans sit in the dirt and eat worms for dinner.

interest rates are the most visible aspect of monetary policy and the one everyone complains about, but they're not the most important.

[Troy711]

Chances are banks wont pass on any of these cuts, at most maybe .25%

It's better then nothing! Just wait and see how long it takes Krudd to say "The Labor government has worked hard to keep intrest rates down" lol.

I heard somewhere that every week the banks keep intrest rates .25% above the RBA rates that they make an extra 30 million dollars.

[Troy711]

They should be over, i think it has become to easy for people to just buy stuff on credit.

I have no issue with credit, but there needs to be laws in place that limits credit amounts to incomes eg if you earn 50k a year maximum credit limit on a card is 5%, if you want a car loan then you must have at least 33% of your weekly income free of the repayment value. So lets say you earn $300(after tax) a week(1300 month average), you must have more than $338 in non outgoing expenditure on a monthly basis. So effectivley you could get a loan for say 6k. This way people have spare cash, the banks are almost guaranteed for people to not default and everyone is happy.

I probably need to tinker with my system a bit, but effectivley you cannot borrow more than 33% of your total net income for personal loans.

I have always been a firm beleive in 'if you can't afford it, don't buy it'. I've never put ANYTHING on finance (apart from a car and a house, but thats different) and I never will. Honestly, if I want that new $3,000 LCD TV I will either save and pay cash or not bother. I fail to see the point in paying extra in intrest for something. I'd rather wait and get it cheaper.

Even Gerry Harvey said he wouldn't Flexi-rent anything from his own store because it is a rip off!

[minux]

I have always been a firm beleive in 'if you can't afford it, don't buy it'. I've never put ANYTHING on finance (apart from a car and a house, but thats different) and I never will. Honestly, if I want that new $3,000 LCD TV I will either save and pay cash or not bother. I fail to see the point in paying extra in intrest for something. I'd rather wait and get it cheaper.

Even Gerry Harvey said he wouldn't Flexi-rent anything from his own store because it is a rip off!

Your ripping yourself off then

Look at it this way, I will use GE as a prime example. If you use GE you can get 4 years interest free deferred payments. This means you have 4 years to pay for it with no compulsory repayments and no interest is charged until 4 years from the purchase date.
Now lets say you want that $4000 lounge suite from Oz Design, they have a 4 year promo on, what do you do? Well me personally, I use my GE card, pay it off at the minimum amount each month which would be $84. Now, that $84 a month won't make me much interest in say a term account that you can draw on, however, the $4000 you had there initially will still give you returns for the next 4 years and while you keep on adding to it.

Whose money is better to use, GE's free money that costs you nothing or your own money that costs you interest returns on your savings?

We have around a 15k limit with our GE Card, currently it has 7k racked up on it that if we HAD to pay tomorrow we could. This being said, we only buy when there is a minimum 2.5 years interest free no deposit on defferred payments, otherwise it is not worth it. It is a great system that you can use to your benefit. That being said, if you aren't too good at saving or with money in general, I reccomend using cash lol.

[Troy711]

Nah, bugger that! I'd still rather pay for it outright. Gives me the satisfaction of knowing that I've acheived something. Plus I've got all my tax money in a high intrest account, plus the first home buyers grant and a fair chunk of savings. I'm currently earning around 100 bucks a month intrest (before tax).

[VY03]

The RBA has shocked everyone by lowering official interest rates a full 100 basis points, down to 6%.

In my opinion, a VERY smart decision as they know the banks can't afford to pass on the full cut but still want a decent cut to be passed on to the average mortgage holder.

Good job RBA!

Yeah but for how long for thats the question

Reducing interest rates is good and bad in many ways

[Rufus®]

Westpac has announced it will pass on an 80 basis point cut to borrowers, after the Reserve Bank of Australia slashed interest rates by one percentage point because of the severe international financial conditions.

Westpac cuts home loans by 80 basis points - Yahoo!7 News

Extremely surpirsing, will be interesting to see who else drops their rates and by how much.

[CSP]

WOOHOO!!! All my finances are with Westpac!

Well, cept one account I have with the QSCU.

[minux]

Westpac cuts home loans by 80 basis points - Yahoo!7 News

Extremely surpirsing, will be interesting to see who else drops their rates and by how much.

I dare say the saying, monkey see monkey do will come to fruition here.

Will save me a few hundred a month if they do.

[minux]

Wahooo, CBA followed suit!!!

full 80 points as well. Super fun happy time.

I still think its a negative move though

[Calaber]

I'd much rather be in the position where mortgage interest rates didn't concern me, and at the same time, I didn't have to rely on the interest rate to boost superannuation values.

[minux]

I'd much rather be in the position where mortgage interest rates didn't concern me, and at the same time, I didn't have to rely on the interest rate to boost superannuation values.

I agree, however, any money extra in my pocket to pay directly onto principal is a great thing, I certainly won't complain about it at this point in time. As I said though, I still think it is a bad idea, but better off in my pocket than the banks for now, could also be just enough relief for those who over borrowed to get back on track and try to make things right.

This being said, it could just be delaying the inevitable for most people.