RBA cuts rate to 0.75%

Did they take much convincing or a simple phone call

 

Nab with 0.15, but more interesting I think is the .30 for investor IO. This is obviously a theme, and you would have to think will support more investor lending...

 

Feeling the pain when you tried to hedge your bets with 50% fixed rate and being egged on by the broker early this year

 

12 months ago many were predicting IO cliff.... Haven't heard that term mentioned in a few months.
And now the banks are clearly targeting investors back with low IO rates .. Amazing turnaround

 

My crystal ball as good as anyone elses, but my guess:
- 1 more cut to 0.5
- And then it will be QE instead of any further cuts.
Have to leave something on the table for the savers so can’t go to 0.

QE will kick start inflation. And we’re below target inflation in any case.

RBA has no remit over house prices, but a further cut + inflation driven by QE isn’t a bad thing short term in my view.

Any bounce in house prices will have a positive effect on the feeling on wealth of homeowners ... which typically sees an uptick in spending. Spending drives growth.

I think a great outcome would be homeowners feeling wealthy and renovating, spending big and driving employment in the construction industry on something other than OTP apartments. It’s a pity most of the materials they use are now made overseas or the local impact would be even better.

Aren’t we silly, digging iron ore out of the ground and selling it for peanuts ... letting China for example value add, and then buy it back?

Australia can spend its way out of this slump - and the federal govt has a role to play too ... they should be less concerned about a surplus than getting some growth going. Now is the time to spend big on infrastructure (and any investors close to that spending should welcome that). But please, no pink batts etc.

Back to iron ore ... and govt spending big - why not use some of the cheap money available to buy up shares in some of our high yielding exporters like Fortescue - where the return even on much lower iron ore prices exceeds the cost of money?

As an aside - my personal belief is any slump is overstated. For example - it’s no use comparing traditional spending with historical rates ... if we don’t capture non traditional spending, eg what gets spent online on Netflix, Amazon, etc. No one really knows what households are spending here.

Finally - lower rates have an impact on the AUD. Not great for traveling overseas - but great for exporting industries and industries that compete with imports.
As an example, I wonder if shutting down the car industry just a handful of years ago and all the industries that supplied it was the smartest move. All those imported cars are about to get pricier. Wouldn’t it be great to still have all those jobs locally.

 

65 is not far away

 

Will NAB pass the rate cut by itself or one have to call them to negotiate?!

 

They will pass it on automatically but won't adjust your monthly repayments if you're on P&I. Can't hurt to call/online msg and see if you can get a better deal though.

 

Hello WBC and ANZ? Not sure if you guys noticed but there was a rate cut yesterday?

 

Well, "capital" used to flow from under-consumption and savings. Under consumption is the heart of capitalism, because the difference is used for investment (as you say).

Now, instead of capital flowing from under-consumption (savings), it comes from the printing presses.

You can do this for a while, but money from the printing press is not real capital - it is inflation masquerading as capital. And as Ludwic von Mises said, "Capital is a process" - ie, you can't have capital without savings.

We are in for a rough ride - get into physical assets like real estate.

 

How far we are away from R.. (r-word). Who will declare it

 

NAB reducing by 0.15%
0.30% for investor IO loans.

 

I for one am super happy to see the spreads between IO and P+I reduce. These premiums never used to exist and got out of hand during Royal Commish. I understand they may keep a bit of a spread but increasing competition for lending hopefully nibbles it back to a few basis points on average over the next year or so.

 

uBank (online NAB subsidiary) passing on in full, OO P&I variable rate now 2.84%

 

I agree. Real estate is an inflation hedge but so is gold, inflation linked IG bonds, shares (after the correction). Although where is the inflation hiding? Officially it does not exist but I can see it everywhere in the real world. Its really interesting to see how this will play out. I dont see things ending well if the RBA starts QE. We will get inflation due to not having a reserve currency. Once that genie is out its hard to put back in without killing a few things.

 

Rate announcement - CommBank

 

Inflation is not hiding - it's just that the CP(lie) doesn't record inflation very well. Inflation is hiding in asset prices. CPI also tends to strip out food and energy prices, which is another reason why we under report CPI.

 

Maybe we see more investors in the market due to the full rate cut from CBA and even more than full cut from NAB,

 

Any update from Macquarie Bank yet? Going to refinance there, so if NAB rate is lower I will have a sad face for a bit

 

Ask the yellow wiggle. He was shouting from the roof tops about the cliff at least 50 posts per day