Australian Interest Rate Increase
#1
An Australian Citizen !!
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Joined: Aug 2004
Location: Terrigal - NSW Central Coast since June 2005
Posts: 1,237
Australian Interest Rate Increase
Hi
Interest rates have just been increased - not too unexpectedly - by 0.25% to 5.75%
Should be interesting on the exchange rate front for the next couple of days!
Regards
Jim
Interest rates have just been increased - not too unexpectedly - by 0.25% to 5.75%
Should be interesting on the exchange rate front for the next couple of days!
Regards
Jim
#2
An Australian Citizen !!
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Joined: Aug 2004
Location: Terrigal - NSW Central Coast since June 2005
Posts: 1,237
Re: Australian Interest Rate Increase
Originally Posted by Jimclevs
Hi
Interest rates have just been increased - not too unexpectedly - by 0.25% to 5.75%
Should be interesting on the exchange rate front for the next couple of days!
Regards
Jim
Interest rates have just been increased - not too unexpectedly - by 0.25% to 5.75%
Should be interesting on the exchange rate front for the next couple of days!
Regards
Jim
......... and there goes the small recovery in the housing market.
Jim
#4
An Australian Citizen !!
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Joined: Aug 2004
Location: Terrigal - NSW Central Coast since June 2005
Posts: 1,237
Re: Australian Interest Rate Increase
Originally Posted by walaj
looking at the graph it is easy to spot when the interest rate announcement was made
As always with these things, minutes can make a big difference on a spot deal.
Jim
#5
Re: Australian Interest Rate Increase
As for mortgages / housing market....I don't think this rise will make a big differerence. However if there is another one there could be chaos. It seems people here (Sydney) are happy to mortgage to the max. There was an article in the SMH at the weekend on this very subject refering to them as the "I want generation", they avoid the property progression ladder of old and go straight for the million dollar mansion as a first house.
Between the wife and I our combined salaries are nearly $150K pa, which I believe is well above the average. On enquiring about a mortgage we were offered $850k (GBP357K) or over 5.5 times our combined salaries, which to us seemed madness as it would leave us next to no money to live on each month. When I pointed this out to the rep, he did not seem bothered at all. We basically stuck to UK bank calculations and went for 3x times our combined salaries. But no doubt there are people out there who have taken mortgages of this size, I think they could be close to be being caught out.
As a comparison I should think Oz mortgages are about 3/4 - 1% higher than the UK as well which also makes mortgages here less affordable to start with.
Between the wife and I our combined salaries are nearly $150K pa, which I believe is well above the average. On enquiring about a mortgage we were offered $850k (GBP357K) or over 5.5 times our combined salaries, which to us seemed madness as it would leave us next to no money to live on each month. When I pointed this out to the rep, he did not seem bothered at all. We basically stuck to UK bank calculations and went for 3x times our combined salaries. But no doubt there are people out there who have taken mortgages of this size, I think they could be close to be being caught out.
As a comparison I should think Oz mortgages are about 3/4 - 1% higher than the UK as well which also makes mortgages here less affordable to start with.
#6
Re: Australian Interest Rate Increase
possible bite
http://www.smh.com.au/news/business/...335767644.html
Banks are expected to pass on today's interest rate rise in full to lift standard variable rates above 7.5 per cent.
The Reserve Bank of Australia today lifted official interest rates by a quarter of one percentage point to 5.75 per cent, the first move since March last year.
The banks could now lift their home loan rates from the current level around 7.32 per cent to about 7.57 per cent.
http://www.smh.com.au/news/business/...335767644.html
Banks are expected to pass on today's interest rate rise in full to lift standard variable rates above 7.5 per cent.
The Reserve Bank of Australia today lifted official interest rates by a quarter of one percentage point to 5.75 per cent, the first move since March last year.
The banks could now lift their home loan rates from the current level around 7.32 per cent to about 7.57 per cent.
#7
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Joined: Dec 2003
Location: Adelaide - South Australia
Posts: 1,820
Re: Australian Interest Rate Increase
Yep - totally f****D up the exchange rate for those waiting to buy AUD's.
Let's hope the BoE lifts rates too to compensate
Let's hope the BoE lifts rates too to compensate
#8
Re: Australian Interest Rate Increase
Originally Posted by marco121068
Yep - totally f****D up the exchange rate for those waiting to buy AUD's.
Let's hope the BoE lifts rates too to compensate
Let's hope the BoE lifts rates too to compensate
#9
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Joined: Dec 2003
Location: Adelaide - South Australia
Posts: 1,820
Re: Australian Interest Rate Increase
Originally Posted by DunRoaminTheUK
Won't this have the opposite effect and weaken confidence in the Australian economy leading to a weaker dollar?
#10
Re: Australian Interest Rate Increase
Originally Posted by marco121068
Hmm - not sure on that one. It's certainly had a crap effect in the immediate term.
I always thought that higher interest rates generally have a negative effect on the economy (in the short term)?
#11
Re: Australian Interest Rate Increase
Originally Posted by DunRoaminTheUK
Won't this have the opposite effect and weaken confidence in the Australian economy leading to a weaker dollar?
The news of the interest rate rises is good for some (such as us who are savers and not borrowers in Oz).
OzTennis
#12
Re: Australian Interest Rate Increase
Originally Posted by DunRoaminTheUK
It was at almost $2.42 yesterday but it seems to have taken a dive to $2.38 this morning.
I always thought that higher interest rates generally have a negative effect on the economy (in the short term)?
I always thought that higher interest rates generally have a negative effect on the economy (in the short term)?
OzTennis
*using your figures A$1 bought 41.3p yesterday, buys 42p today
#13
Re: Australian Interest Rate Increase
Originally Posted by OzTennis
In very simple terms, other things being equal, a rise in interest rates means that there is an increase in returns on savings and investments (as well as higher interest on mortgages, loans and overdrafts). This makes it more attractive for overseas investors and so there is an increase in demand and hence price (exchange rate) for Australian dollars. That's the theory.
The news of the interest rate rises is good for some (such as us who are savers and not borrowers in Oz).
OzTennis
The news of the interest rate rises is good for some (such as us who are savers and not borrowers in Oz).
OzTennis
#14
Re: Australian Interest Rate Increase
Originally Posted by OzTennis
A 'fall' as you put it is a fall in what the £ will buy, so it is a 'rise' in the A$*. As I said, increased demand for A$'s, price goes up (i.e. £stg buys fewer A$'s).
OzTennis
*using your figures A$1 bought 41.3p yesterday, buys 42p today
OzTennis
*using your figures A$1 bought 41.3p yesterday, buys 42p today
#15
Re: Australian Interest Rate Increase
Originally Posted by DunRoaminTheUK
So, what you mean is that you get less dollars for your pound (i.e. dollar gains strength against sterling?)?
If you divide 1 by 2.42 or 2.38 you get what the dollar buys (reciprocal).
OzTennis