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Treasury, APRA warn banks over low rates

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Australian Broker | 28 Jul 2014, 08:53 AM Agree 0
Treasury is concerned interest rates remaining at record lows could have major ramifications on the $1.4 trillion mortgage market
  • Patrick Marion | 28 Jul 2014, 10:34 AM Agree 0
    Doesn't APRA know that the banks' qualifying rate to test eligibility is nothing like the rates being offered at present?

    Maybe we should get them to do a Certificate IV in Financial Services!
  • MCC | 28 Jul 2014, 10:37 AM Agree 0
    Couldn't agree more - It is now even more imperative that good credit risk policy is maintained & that we ''credit Advisers'' are doing our jobs to the best of our abilities! Remember WE don't have to chase 'sales targets'!
  • Allan Faint | 28 Jul 2014, 10:48 AM Agree 0
    While rates were droping after the GFC, the bank kept about 2% of the RBA variable rate reduction to boost their profits. Why was treasury not worried about the poor home buyer then? The RBA does not appear to be too concerned, so appears to me as if treasury is trying to put pressure on the RBA. Why? The banks are finaly giving a little back, though I bet they will make another record profit this year. Most other business are just happy to make a profit each year.
  • chrisc | 28 Jul 2014, 10:49 AM Agree 0
    Well the Federal & State Govts budgets and policies are doing nothing to promote confidence and business growth - some one has to start driving it. Only a month ago, RBA said they may not reduce rates anymore and that it was asking the business community to take on growth and accept a little more risk in so doing - seems now it is. Good to see competition starting to come back and really its not just up to the Lender to make equitable and responsible decisions. The customer also has to take responsibility for their financial position and make it work accordingly to their position - if they can't afford it now and in the short term future and/or they cannot manage money well, while rates are low and property prices are low - they really have to be responsible in their electing to go with it or not.
  • Bottom Line | 28 Jul 2014, 10:54 AM Agree 0
    Nearly all banks service their loans at 2.5% above the variable rate anyways. APRA already know this, and Treasury should.
  • PF | 28 Jul 2014, 11:00 AM Agree 0
    Surely banks reducing profits by passing on lower rates to borrowers is fine as long as high lending qualification standards are maintained.
  • Housing Recovery | 28 Jul 2014, 11:39 AM Agree 0
    What planet is Treasury on? So much for the govt needing housing to help the rest of the economy recover from the Treasury failure to keep our exchange rate competitive. There are many activities Treasury could have done to save our tourism, farming, manufacturing, education for overseas students and export markets. The mining boom has been squandered by the Howard, Gillard and now Abbott governments. Our interest rates are very high by world standards, and consistently are. The cost of living in Australia is one of the most expensive by global standards. Govt expenditure has been slashed. Now Treasury wants to snuff out a housing recovery that seems to be our only ray of economic hope. Their answer is to enter into more Free Trade Agreements, that have now been proven to consistently work against Australia. Abbott & Treasury are pushing to sell (when other countries only lease) more of Australia (land, businesses, housing) to any foreigner with cash. Heaven help our kids.
  • Tim H | 28 Jul 2014, 11:50 AM Agree 0
    Easing of lending standards happens from time to time as anyone who has been in the industry for more than 10 years would know. Whilst current lending standards are not as stringent as they have been in the past they certainly are not weak and as has been mentioned by other commenters assessment rates are at least 2% higher than the actual loan rate.
    A borrower locking in a good five year rate today will get certainty of loan repayments and in a lot of cases the ability to make additional repayments, build up surplus savings or put some funds into improving their home.
    It would be much better if Treasury and the Reserve Bank were to send out this positive message rather than the negative "We are concerned" messages.
  • Regional Broker | 28 Jul 2014, 01:30 PM Agree 0
    Every bank I deal with works its affordability assessment on at least a 1.75% margin above current rate AND we have just seen the living expenses rise this week.

    Credit policy while not quite as strict than it was just after the GFC is still very strong .
    Are these treasury people who live and work in Canberra actually in touch with reality . It would not hurt for them to spend two to three days with a broker in a suburban setting in a capital city ( not Canberra) ,I think they would whistle a different tune if they did!

    Reality check please , hopefully they will see these comments
  • John | 28 Jul 2014, 03:28 PM Agree 0
    Snoozy APRA, they lift their head off the pillow, say anything that comes out of their mouth and go back to sleep. OK bring rates up and lets see what happens? APRA will wake up again, say the same garbage and go back to sleep. GET YOUR FACTS RIGHT BEFORE YOU OPEN YOUR MOUTH APRA
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