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Prepare for fixed rate 'paradigm shift': Milburn

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Australian Broker | 21 Dec 2011, 07:00 AM Agree 0
Brokers should prepare for a shift towards the certainty of fixed rates among their clients as the European debt crisis continues to bite
  • Wozza | 21 Dec 2011, 10:45 AM Agree 0
    Who can understand economics? Doesn't the European crisis mean interest rates still have further to fall (remember the GFC).
  • ozboy | 21 Dec 2011, 11:07 AM Agree 0
    A lot of "financial advice" above. Here's my prediction: RBA will drop rates by more than 50 basis points in the first half of next year....at least. Now the big question: How much of that will be passed onto consumers? Anyone?
  • M. J. R. | 21 Dec 2011, 11:08 AM Agree 0
    I'll go on the record here and argue the opposite - in-fact, I can see another rate cut by the RBA in Feb and I don't believe that banks are buying too much in the way of funds from off-shore -- as recently reported in the open media, banks are using more and more of 'deposits/savings' to lend out domestically, apparently its above 50% of funding and is still growing... so our reliance on funds from overseas is decreasing.

    Europe will enter a recession (and I believe by June 2012 a depression) and we will be hit in various ways --- however, money (in contrast to 2008) will not get more expensive, it will get cheaper as europe implodes money will fly out trying to find a safe place to earn a return.

    In 2008 we begged for funds, this time around the funds will be banging on our door and screaming "let's us in".

    So, back to above story and whether to fix or stay with a SVR.... I'll vote for the latter and suggest folks with a mortgage throw in wads of extra $$ as often as they can....... fixing interest rates is more about 'contractually agreeing to help a Bank earn the maximum profit out of customers'.
  • M. J. R. | 21 Dec 2011, 11:12 AM Agree 0
    To Ozboy:

    In answer to your question - this is how I see our banks using the impending European crisis to their advantage:
    1. RBA drops official cash rate by 25 basis points.

    2. Banks argue (with real serious looks on their faces) that we (Aussie banks) need to protect Australia and maintain our strong Aussie banking industry so, we need to retain 10 basis points and can only pass on 15 out of 25 basis points.

    They are so predictable.
  • Alwyn Beardmore | 21 Dec 2011, 11:23 AM Agree 0
    Of course Bank representatives will push fixed rates, it's in the banks interests but the brokers need to present a balanced view to their clients.
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