RESERVE BANK LEAVES OFFICIAL RATES ALONE FOR NOW!
Thank you Reserve Bank Board, you have made one aussie mortgage battler’s month by not raising official interest rates. The spin from the media is there may even be a drop in rates in the near future if inflation drops a little. A lower oil price will have a domino effect on inflation, so a rate drop is a real possiblility. But, will the Banks and other lenders put rates on hold?
Most major mortgage lenders have increased the rate on their variable home loans by between .10% and .15%. on top of the RBA increases. They claim it is because of funding costs. I quote Ross McEwan, of the Commonwealth Bank, group executive retail banking services: “The sub-prime crisis – which was sparked when US lenders lost billions of dollars on bad loans – means the cost of sourcing money has gone up. Basically, banks need to pay more for the money they borrow to lend to consumers. The bank continues to balance the needs of its shareholders and customers by not passing on the full impact of the increased funding costs to borrowers and as a result has seen the margins on its home loan business decline significantly in the last year, The Commonwealth’s rate rise means payments on a $300,000 mortgage taken out over 30 years will rise by about $7 a week.”
However, my observation has been that deposit interest rates have maintained their correlation with official rates. If the banks are having trouble raising funds in the overseas credit markets, I would have thought they would try and raise their funds at home by offering more attactive deposit rates. It seems mortgage holders continue to bare the brunt of the worlds financial problems. I for one will be trying to eliminate my mortgage as soon as possible, so I do not have to worry about being treat badly by lenders. I suggest you do the same. A few sacrifices today, may well mean the difference between baked beans and steak in the future.
Owning a home outright, provides a fantastic feeling of achievement and an increased sense of self-worth. That feeling is worth every moment of mortgage stress endured.
P.S. Dont forget to check your mortgage statements. Lenders make mistakes, please keep them honest.