New record cash rate 1.75

That may be the case, however if this is so, and being a prudent investor, alarm bells should start going off.

But being hocked up to the eyeballs, and knowing that's where you (not necessarily your good self, S1mon) are, and the recalcitrant nature of your fair weather banking friends (and I use the term loosely...), keeping your options open is a much more ideal situation, rather than limiting them.

Sort of a financial version of Hotel California...

 

yes no doubt good to have options...tho im not necessarily sure hocked up to the eyeballs and not being able to meet serviceability requirements post apra is the same thing

 

I feel hocked up to my eyeballs but I actually have roughly 44% equity in the portfolio...

 

Bankwest .20% for OO and investors. 20 May.

 

I am having problems getting a good rate for a new investor loan because the loan will be under $500,000k. I should have bought a more expensive IP! lol

 

Taken from the RBA Statement of Monetary Policy

Growth is good.

But the inflation figures would tend to suggest they're almost certain to cut again in the short term, and possibly even beyond that - pending further revaluation of their medium term forecast.

 

Firstmac passed on .25% in full effective 23 May 16

Anyone else have any info on other smaller lenders ?

 

Which banks are passing on the RBA rate cut? | finder.com.au

 

And front cover of today's SMH:
"Interest rates could be cut again as soon as next month" (sorry I dont know the link)

 

Im looking at the endless summer bit. If it doesn't stop anytime soon i will get very tan - been going to the beach every week.

Still wondering if bank will pass the rate cut if there's another next month.

 

Loving the endless summer. Few years ago in May I was wearing thick coats to work, this year its still summer dresses or tops with light sleeves.

I reckon banks will pass on all (or the bulk) of the rate cut if there's another one next month. Banks don't want the government to call for a Royal commission (way too costly!).

For clawing back of the rate cuts, @euro73 opinion is that this would happen next year and the cuts would probably be clawed back due to APRA and/or Basel IV requirements (Basel IV requirements are still a huge unknown quantity at this stage). Likely though that the banks will need to hold more capital so it will cost more to fund and I don't disagree there.

 

They shouldn't pass that rate cut, let alone the future ones. This is a huge mistake. Rate cuts should have been only to business loans (not property related). What we have now is another step closer to a property crash in the future.

 

How so? If the serviceability calculators haven't changed from 7.5%-8%

 

i think i agree with on this one @barnes
There was enough heat in the property market before the cut- sydney still had moderate heat, melbourne and brisbane had considerable heat. No crash though...and even future cuts wont cause a crash. imo.
However...Business tax rates are still high, and business loans rates are still fairly high ( especially compared to overseas competition). Thats where the cut would have done more good imo. I think if there are future rate cuts, they will go more towards business lending vs property.

 

Cheap credit is the main source of the housing bubble we are experiencing right now. You want to stabilize house prices - make the ability to borrow harder in every stage. You ease monitory policy - help business, don't help passive investing. This is the road to nowhere.

 

The higher the prices of housing go, the closer we come to a crash. I saw it many times overseas. I would really like to avoid it here. But it seems to be I'm the only one. Sad, a lot of people will get burned.

 

Agree. Inflationary cocktail has been created again:

• Super investments have been capped, thus creating a swath of disposable money looking for tax shelter. Which is the preferred tax shelter outside super ?
• Interest rates have been cut (with 1 more expected) which provides ongoing serviceability facilitation.

Unless labor gets in, this merry go round will only get headier till it abruptly stops and participants are flung out. Sometimes the only way to learn is from own mistakes .

 

I agree 100% that cheap credit fuels the bubble, and it's already to late as that has happened.
But if service calculators are now around 7.5%, doesn't that mean your limited to what you can borrow?
It's not like you can borrow more than previously if interest rates drop these days. Unless your positively geared by a large amount.

 

A rare comment from the only person to be both Governor of the Reserve Bank of Australia and Secretary to the Treasury.

Bernie Fraser chides RBA for budget day rate cut 'ambiguity'

Mr Fraser, who is considered the architect of the Reserve Bank's 2 to 3 per cent inflation target, said he was not "in the slightest" bit concerned about letting inflation undershoot the range for a lengthy period of time – which contradicts the central bank's quick action against signs of deflation in the March quarter

"I don't see myself as fiddling with monetary policy to deal with the deflation problem," he told The Australian Financial Review.

"I don't see monetary policy as solving the problem with zero, or practically zero, interest rates or quantitative easing. It can't get things moving."

 

The RBA has noted the housing market has been subdued recently, that's one reason for the cut. And the RBA rarely makes a single cut, they're most likely to do it in August when they update their economic projections in their quartely Statement on Monetary Policy.

The key statistics to watch:

GDP
Unemployment
Inflation

They have the legal mandate to help control these three things.