Passing it on in full
Oct 12th 2012, 4:15 am
#1
Lost in BE Cyberspace
Thread Starter
Joined: Dec 2010
Posts: 14,040
Passing it on in full
Hey .... not really too sure about the ins and outs of this, probably because the RBA aren't set up for this type of process, but wouldn't it be good if the RBA could give loans at the interest rate they set, whilst undercutting the banks who fail to pass on the cut in full. Same happens in UK.
Oct 12th 2012, 9:36 am
#2
BE Forum Addict
Joined: Nov 2004
Posts: 2,584
Re: Passing it on in full
I don't know why we bother with the RBA. The banks never pass on a full cut and if rates rise they increase them immediately by more.
Oct 12th 2012, 10:09 am
#3
Lost in BE Cyberspace
Joined: Mar 2003
Posts: 9,397
Re: Passing it on in full
It's all very well a central bank "setting" interest rates, but they do so in response to criteria laid down by the government of the day.
The banks have to get deposits to lend out: just because the RBA sets the rate at say 1% doesn't mean the banks can borrow at anything like that.
There are always two sides to the issue: those of us who have saved (despite interest rates on our mortgages once approaching 15%) and rely on the interest from our deposits obviously have a different look on the interest rates discussion. I spend quite a lot of time trudging around the banks and societies negotiating deposit rates: if the banks can't attract deposits they can't lend to potential homebuyers so in that instance the RBA rate is irrelevant.
The banks have to get deposits to lend out: just because the RBA sets the rate at say 1% doesn't mean the banks can borrow at anything like that.
There are always two sides to the issue: those of us who have saved (despite interest rates on our mortgages once approaching 15%) and rely on the interest from our deposits obviously have a different look on the interest rates discussion. I spend quite a lot of time trudging around the banks and societies negotiating deposit rates: if the banks can't attract deposits they can't lend to potential homebuyers so in that instance the RBA rate is irrelevant.
