Will APRA captial requirements force rates to rise?

Discussion in 'Loans & Mortgage Brokers' started by eng, 20th Jul, 2015.

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  1. eng

    eng Well-Known Member

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    eng, 20th Jul, 2015
    #1
  2. jaybean

    jaybean Well-Known Member

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    I assumed this meant they wouldn't pass on future rate cuts. I never even thought it would manifest in a rise.
     
    jaybean, 20th Jul, 2015
    #2
  3. Tekoz

    Tekoz Well-Known Member

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    But eventually rate has to rise up soon due to property price is not affordable at the moment for the majority of the people.

    [​IMG]
     
    Tekoz, 20th Jul, 2015
    #3
  4. Roosterman

    Roosterman Well-Known Member

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    Tekoz that is a somewhat random and incorrect thing to say.
     
    Roosterman, 20th Jul, 2015
    #4
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  5. Kangabanga

    Kangabanga Well-Known Member

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    Likely more capital raising from the stock market before anything else
     
    Kangabanga, 20th Jul, 2015
    #5
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  6. sash

    sash Well-Known Member

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    He is random for sure....we plan to have a blanket party with him at the next SS meeting at Wenty. ;)

    That may sense into him. :p

     
    sash, 20th Jul, 2015
    #6
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  7. Mick C

    Mick C Well-Known Member

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    There's talk of APRA not being happy with the current sanctions in place and they want the Big 4 to increase their capital per loan ( esp over 90% loans and the IP...before it was 1 to 1.2.now it's 1 to 1.8!!!)

    There's only 3 moves the bank can make

    1. increase rate by 0.15% - 0.25% ( this is roughly the cost to close the extra cost for capital)
    2. Reduce expense - ie sack staff or employ better technology to make it more efficient and cut cost
    3. Reduce dividends from shareholders

    Point 3 is the most likely outcome. Hence why the banks shares has slowed down in their growth and some super funds are puling out as well.
     
    Mick C, 21st Jul, 2015
    #7
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  8. Tekoz

    Tekoz Well-Known Member

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    @Mick C

    Talking for high LVR rate yes, that does make sense for anything greater than 80% it is quite risky.
    But as for number #3, no it is safer and better off to do number #2 and #1 at least, reducing the dividends will hurt more for the long term.
     
    Tekoz, 21st Jul, 2015
    #8
  9. Marg4000

    Marg4000 Well-Known Member

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    Agree #3 unlikely.

    Most upper management bonus payments are tied in some way to maintaining or increasing share prices. Cutting dividends will lower the share price further.
    Marg
     
    Marg4000, 21st Jul, 2015
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  10. Tekoz

    Tekoz Well-Known Member

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    @Marg4000 Yes that's what I can see.

    Most probably they will be aggresively outsource more of their service or cutting down cost by eliminating the entry level staff. Look at McDonald's & Coles / Woolies with their self service counter.
     
    Tekoz, 21st Jul, 2015
    #10
  11. Mick C

    Mick C Well-Known Member

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    ANZ increases standard variable rate on IP by +0.27% as of 1/8/2015 - New and existing.....
     
    Mick C, 23rd Jul, 2015
    #11
  12. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    and the government approved gouge continues : (

    ta
    rolf
     
    Rolf Latham, 23rd Jul, 2015
    #12