CBA keeps some rate cut

From the SMH:

The Commonwealth Bank is only passing on part of Tuesday’s cut in official rates to home loan customers, but has taken the unusual step of raising some deposit interest rates.

The country’s biggest bank on Tuesday said it would lower its standard variable mortgage rates by 0.20 percentage points to 5.45 per cent, compared with the Reserve Bank’s 0.25 percentage point cut in official rates.

At the same time, CBA said it would increase the rates paid on 8 month term deposits by 0.55 percentage points to 3.05 per cent.

Meanwhile, from Banking Day:

National Australia Bank has quit the self-managed superannuation fund loan market, telling brokers it will no longer offer the controversial loan.

Several sources have told Banking Day that NAB was getting out of the market, with one suggesting there may have been an issue of mis-selling through one adviser group.

The bank did respond to inquiries.

NAB’s move comes at a time when the Government is considering a Financial System Inquiry recommendation that self-managed superannuation fund trustees be banned from borrowing.

At the same time, the Australian Prudential Regulation Authority is cracking down on investor property loans and the Australian Securities and Investments Commission is moving against a revival of property spruiking.

…NAB is understood to have been a small player in the market. Among the big banks Westpac and Commonwealth Bank are more active, while ANZ does not offer SMSF loans.

As we all pay a little more for stability, little by little monetary firepower slips out the door.

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  1. RaglanParade

    My view is that Commbank is trying to build a little war chest of capital – as a buffer for a slow down.

    I expect the spread between Reserve Bank rates and Retail rates to grow by around 100 basis points over the next 18 months.

    • Do they even need one? The government will probably just try to bail them out anyway. If CBA failed, we’d all go belly up.

      With the current spreads, I’m all for a 20% extra tax rate for Banks. $30B earnings a year, gives $6B a year. How’s that for you budget, Joe? It’s not like the banks even do anything with the money anyway.

      • RaglanParade

        Yeah but if even one of the big four banks falls over – It’s about $400 Billion the government is going to have to cough up.

        Real income taxation rates would honestly have to double from 13% to 26% to even make in roads into it.

    • flyingfoxMEMBER

      Probably. What proportion of the book is in Perth, Darwin and NQLD? probably starting to factor in some losses form there.

  2. Reserve Bank of ANZ passed the cut on in full. What happened to independent Friday decisions? They couldn’t stick to a policy if their lives depended on it.

  3. Andrew LeesMEMBER

    Has the RBNZ made a statement in the last half hour? The NZD just took a tumble.

    Ahh no, just not so good employment data

  4. Its interesting that the rates are available for home loans in the US never got below 3-4% despite the fed rate going to 0

    Im not sure of the mechanism, but im assuming we can expect the same result here in australia which would mean that home loan rates are very near their potential bottom already

    • flyingfoxMEMBER

      US rates follow the 30 yr bond yield because their rates are fixed for the duration of the mortgage. Our variable rates can go much closer to the RBA cash rate.