This latest rise in interest rates was not needed. I cannot understand how they can say that the economy is "overheating"
From where I sit I can only see very little happening, builders, plumbers, electricians and all other trades are surviving on renos and little jobs. Very few people are building residential properties and even less commercial developments. In Mareeba subdivision land is abundant but very little moves.....
The stumbling block,from what our clients are telling us, is the uncertatinty over the "bizare" behaviour of the RBA, the arrogance of the 4 sisters ( The Banks) and the lack of resolve of the Federal Government in reining in the 4 sisters. I dont begrudge a dollar to anybody, even the politicians, the banks have been very greedy and pedantic, if it's good enough for Real Estate to be regulated to such an extent that in Queensland there is a cap (Maximum) on the commision we can charge on residential properties, the same should be valid for the Banks. And while they are there make the same cap, say 2 percent on the official interest rate, the maximum they can charge on small business loans as well.
Such a move will see confidence return to the market both for new and established homes and small business will have some certainty that the cost of borowing money, line often used by the 4 sisters, doesn't spiral out of control.
That leaves only the RBA as an uncertainty, I cannot understand why their deliberation and the reasoning behind it have to be so secretive. After all the better we understand how the system works the better decisions everybody can make. Decisions that will spur development in areas other then mining.
Then again, maybe it's too simplistic and easy solution, politicians will not be able to grand-stands for months on end telling us how much work they do, public servants will not be able to form endless committees researching the subject and comparing the suggested solutions with something implemented already somewhere else in the world, and so on and so fort....
The article below has been lifted from a First National Publication.... I suppose it helps strentening my argument....
"Interest rates have again become a key area of focus in the property market, following the Reserve Bank of Australia’s (RBA) Melbourne Cup day 0.25 per cent hike to an official rate of 4.75 per cent. The Australian’s Terry Ryder described the decision as a ‘Brain Explosion’, accusing the RBA of inflation paranoia ‘even though the latest measures all show inflation comfortably under control’.
Naturally, agents nationwide are concerned about the potential the lift has to further slow a somewhat languid spring market. The Commonwealth Bank’s decision to lift its key lending rates by 45 basis points, almost double the RBA’s official move, got the attention of the highest levels of Government and has incurred the ongoing wrath of an already overly interest rates focused media scrum.
Recent analysis found that since 2001, Australian mortgage rates have been predominantly above those of the rest of the developed world and, with almost 90 per cent of Australian loans being variable, most borrowers can expect to pay more.
There are two important lessons from the RBA’s recent move.
The first is that the RBA is more preoccupied with future inflation than the probable weakness of a large chuck of the Australian economy. This means we can expect more interest rate rises.
The second is that instead of seeing the RBA’s likely future course as a threat, all business people have the opportunity to respond to it as an opportunity.
One of the four economists out of 22 surveyed by Sky News Business Channel accurately predicted the Cup Day increase - Stephen Roberts, Nomura Australia’s Chief Economist. He believes we’ll see more rises by the end of the March quarter and many economists also believe there will be four rises in total next year. This is to offset a surge of demand coming out of our rising terms of trade and related business investment. We’re all going to have to get used to a stronger dollar.
Until China falls into an economic slump, Peter Switzer believes mortgagees will be locked into increasingly expensive deals with their banks. However, sensing the threat of Federal Government intervention, officials at three major banks said yesterday that exit fees, which cost customers upwards of $900, could soon be a thing of the past."
P.S. Sounds very much like Mr Swan got his marching orders from the banks and instructed our PM, on sunday she said that they where going to introduce legislation to eliminate "exit fees", guess what, the banks have guzumpted the government all togheter!!!!!!!!!
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