Banks defiant on mortgage rates

Original article by Joyce Moullakis, Lachlan Moffet Gray
The Australian – Page: 17 & 21 : 5-Nov-20

Australia’s four largest banks will keep their variable home loan interest rates unchanged, despite the Reserve Bank’s decision to reduce the cash rate to a record low of 0.1 per cent. However, the "big four" banks will all reduce their fixed home loan interest rates, with some falling below two per cent for the first time. The majority of mortgage loans across the Australian financial sector have variable rates, although more borrowers are opting for fixed-rate loans in the low-interest rate environment.

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Retirees hit but ‘it’s for the good of all’

Original article by Patrick Commins
The Australian – Page: 4 : 4-Nov-20

Reserve Bank governor Philip Lowe has conceded that retirees and savers will be hard hit by the decision to reduce the cash rate to a record low of 0.1 per cent. However, Lowe contends that they need to be mindful of the "collective good", arguing that lower rates will benefit the broader community by supporting spending and creating jobs. Rice Warner’s executive director Michael Rice notes that retirees who are only partly self-funded will be particularly hard hit by the decline in deposit rates, and many will become more reliant on the age pension.

CORPORATES
RESERVE BANK OF AUSTRALIA, RICE WARNER ACTUARIES PTY LTD

RBA’s shot in zero-sum rates game

Original article by Patrick Commins
The Australian – Page: 1 & 4 : 4-Nov-20

Reserve Bank of Australia governor Philip Lowe has flagged the use of "additional monetary policy options" if necessary, after reducing the cash rate to a record low and announcing a quantitative easing program. Lowe has indicated that the cash rate will remain at 0.1 per cent for 3-5 years, while the RBA’s three-year bond rate target has also been reduced to 0.1 per cent. Meanwhile, former RBA board member John Edwards has hailed the "courageous" and "historic" decision to pursue quantitative easing. The central bank will purchase about $5bn worth of federal and state government bonds each week over the next six months.

CORPORATES
RESERVE BANK OF AUSTRALIA

RBA lays ground for Cup Day cut

Original article by David Rogers, Patrick Commins
The Australian – Page: 13 & 20 : 16-Oct-20

Expectations of an official interest rate cut in November have been heightened by comments made by Reserve Bank of Australia governor Philip Lowe. He has told the Citi Investment conference that further easing of monetary policy is likely to "get more traction" as the economy re-opens than it would have at the COVID-19 pandemic’s peak. Kristina Clifton of the Commonwealth Bank says the RBA is likely to reduce the cash rate from 0.25 per cent to 0.1 per cent in November, and expand its bond-buying program to include five and 10-year government bonds.

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Shock and awe budget rate cut to cushion bumpy recovery

Original article by Patrick Commins
The Australian – Page: 1 & 4 : 23-Sep-20

The Reserve Bank of Australia’s deputy governor Guy Debelle has signalled that there could be a further reduction in the cash rate, which fell to a record low of 0.25 per cent in March. The next scheduled meeting of the central bank’s board is on 6 October, when the federal government will also hand down the Budget. National Australia Bank’s chief economist Alan Oster says the cash rate is likely to be reduced to 0.1 per cent on this day or in November. He adds that further cutting the cash rate may not do much to stimulate the economy or create jobs,

CORPORATES
RESERVE BANK OF AUSTRALIA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Savings rates are drying up as banks race to the bottom on mortgages

Original article by Matt Johnson
The New Daily – Page: Online : 3-Jun-20

Data from Canstar shows that Australian banks reduced the interest rates on a range of savings accounts and term deposits by up to 75 basis points in May. However, the interest rates on mortgage loans were reduced much less aggressively, averaging just 0.08 per cent for variable home loans and 0.36 per cent for fixed-rate loans. Steve Mickenbecker of Canstar attributes this to factors such as growing competition from non-bank mortgage lenders. However, he does not expect rates to fall much further.

CORPORATES
CANSTAR PTY LTD

Greedy banks protect profits: ACCC

Original article by Cliona O’Dowd, David Ross
The Australian – Page: 15 : 28-Apr-20

The Australian Competition & Consumer Commission has released the interim report of its Home Loan Price Inquiry. It has concluded that the nation’s four major banks failed to pass on the full 75 basis point reduction in the cash rate during 2019 in order to protect their profits. The ACCC also found that existing home loan customers tend to pay higher interest rates than new borrowers. Steve Mickenbecker of Canstar says it is a ‘lethargy tax’ rather than a ‘loyalty tax’, and the onus should be on existing customers to actively request a lower interest rate.

CORPORATES
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, CANSTAR PTY LTD

Prepare to be hit but we’ll ease blow: RBA

Original article by Adam Creighton
The Australian – Page: 4 : 8-Apr-20

Reserve Bank of Australia governor Philip Lowe has indicated that the cash rate will remain at 0.25 per cent until inflation returns to its target range of 2-3 per cent and the unemployment rate falls to around 4.5 per cent. The central bank will also maintain its bond-buying program until these targets are achieved. Lowe has warned that the domestic economy faces a "very large economic contraction" due to the coronavirus, while he says the unemployment rate will rise to its highest level in many years. The RBA left the cash rate on hold at its April board meeting.

CORPORATES
RESERVE BANK OF AUSTRALIA

Non-banks clamp down on new loans

Original article by Joyce Moullakis
The Australian – Page: 13 & 14 : 6-Apr-20

Non-bank lender Pepper Australia has increased its home loan interest rates and tightened its credit criteria as it assesses the impact of the coronavirus on its operations. Pepper will stop offering construction loans and will require a bigger deposit for commercial loans, while larger deposits will also be needed for its two types of home loans. Fellow non-bank lender Bluestone has also introduced new credit criteria as well as increasing the rates on all of its loan products by 35 basis points.

CORPORATES
PEPPER AUSTRALIA PTY LTD, BLUESTONE GROUP PTY LTD

$105b bridge across the chasm

Original article by Matthew Cranston, James Eyers, James Frost, Jonathan Shapiro
The Australian Financial Review – Page: 1 & 4 : 20-Mar-20

Reserve Bank of Australia governor Philip Lowe has warned that the cash rate is likely to remain at the new record low of 0.25 per cent for three years. The emergency interest rate cut on 19 March is the RBA’s first out-of-cycle move since 1997; it has coincided with the announcement of a government bond-buying program which aims to ensure that the benchmark three-year bond yield remains at around 0.25 per cent. Lowe says there will be no limit to the bond-buying program. The RBA has also announced a $90bn line of credit for banks to provide low-interest loans to small and medium enterprises; the federal government will provide an additional $15bn to small lenders to help with their funding.

CORPORATES
RESERVE BANK OF AUSTRALIA