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Lower rates won’t fuel debt, property prices – July 16 2019

Australian Financial Review

The Reserve Bank has played down fears of rising household debt levels following its decision to cut interest rates a second time to a record low 1 per cent, and the central bank’s latest minutes suggest that “unwelcome borrowing” is unlikely.

Minutes from the Reserve Bank meeting released on Tuesday indicate that while boosting employment and wage growth was a clear focus for the central bank in cutting rates again, it did consider concerns about households taking on more debt and potentially inflating property prices.

“Members also judged that the extent of spare capacity in the economy, and the likely pace at …

Savers ‘staring down the barrel at zero interest rates’ as big banks cut – 12 July 2019

Sydney Morning Herald

Savers ‘staring down the barrel at zero interest rates’ as big banks cut

Two of the nation’s biggest banks have slashed key deposit rates to virtually zero, leaving millions of Australians who depend on the interest from their savings with almost no extra income.

ANZ Bank and National Australia Bank have reduced the rates they are offering on their basic saver accounts, just days after the Reserve Bank of Australia’s most recent cut to official interest rates.

According to financial services research firm Canstar, ANZ has halved its online saver base interest rate to 0.15 per cent. It has kept its …

Economists say the RBA will cut twice more this year – 1 July 2019

Australian Financial Review

The Reserve Bank will cut its cash rate twice more this year, beginning tomorrow, to take it to 0.75 per cent, according to the median forecast in The Australian Financial Review’s latest quarterly economists’ survey,

A cut of 0.25 of a percentage point by the RBA governor Philip Lowe on Tuesday, following the June meeting cut, would bring the cash rate to a record low of 1 per cent.

Even if Dr Lowe chooses not to ease again this week, all surveyed economists believe the governor will cut at least once more this year, with a strong majority suggesting twice more.

“Further …

RBA makes the case for more interest rate cuts – 20 June 2019

Australian Financial Review

Reserve Bank governor Philip Lowe said a much more aggressive easing policy was needed to achieve higher employment growth because the data suggested “we are not making significant inroads” in absorbing spare capacity.

Dr Lowe said more interest rate cuts on top of the first move in almost three years, on June 4, would be needed to reduce unemployment and get inflation back to a more comfortable level.

“It is not unrealistic to expect a further reduction in the cash rate as the Board seeks to wind back spare capacity in the economy and deliver inflation outcomes in line with …

APRA herds flock away from risky loans – June 13 2019

The Australian Prudential Regulation Authority’s decision to penalise banks who write risky loans will make some mortgages more expensive and is being viewed as a win for the big banks.

The changes are being rolled out to ensure the Australian banking system reaches its goal of “unquestionably strong” and will build on APRA’s common equity tier 1 (CET1) benchmark of 10.5 per cent. They are designed to encourage the banks to write lower risk loans.

APRA chairman Wayne Byres said the changes to risk weights for different loan types were an attempt to guard against the concentrated exposure banks have to property …

RBA has extreme stimulus measures on standby – 11 June 2019

Australian Financial Review

The Reserve Bank of Australia is approaching the limits of interest rate cuts, so financial market attention is turning to the possibility of it resorting to an unconventional stimulus known as quantitative easing.

Undoubtedly, this would be an extraordinary step for the RBA. It probably wouldn’t do so lightly, unless the economy was in trouble. Yet a fact overlooked by many outside the RBA is that quantitative easing would not be unprecedented in Australia. The RBA conducted a version of it during the 2008 global financial crisis.

The RBA’s balance sheet expanded 50 per cent to more than $150 billion …

RBA governor sees rates at 1pc – 5 June 2019

Australian Financial Review

Reserve Bank governor Philip Lowe has set up financial markets to expect a further easing bias to 1 per cent suggesting the only way the bank can achieve employment growth and inflation targets is through cutting rates.

Dr Lowe said the bank’s decision to cut rates to an historic low of 1.25 per cent from 1.5 per cent had been driven by a failure to see enough wage growth and inflation, and not because of a deterioration in the economic outlook since the bank last met.

“Are interest rates going to be reduced further? The answer here is that the board has not …

RBA to reset mortgage rates to record low – 30 May 2019

Australian Financial Review
Mortgages are already at the cheapest levels on record and will fall even further if the Reserve Bank delivers a widely expected interest rate cut next week, after the Coalition’s election victory reignited interest in the housing market.Forecaster JPMorgan on Wednesday issued the most dovish prediction in the market with respect to the RBA’s policy path: chief economist Sally Auld tipped the central bank would cut four times to 0.5 per cent by the middle of 2020. The 10-year government bond yield tapped a record low 1.48 per cent.Experts expect the major banks to pass on most, if not …

Markets caught between rate hopes and trade storms – 27 May 2019

Australian Financial Review

Firming expectations that the official cash rate will be cut next month would be broadly welcomed by markets grappling with concerns the US-China trade dispute will get worse before it gets better and softer conditions in the labour market.

With the 10-year government bond yield hitting a record low on Friday, investors remain wary about the immediate prospects for the Australian sharemarket.

The futures markets suggest the S&P/ASX 200 Index will start marginally lower on Monday, pricing in a 6462 level for the benchmark after a subdued session on Wall Street ahead of a holiday long weekend.

The ASX performed strongly last …

APRA scraps 7pc home loan buffer – 21 May 2019

Australian Financial Review

APRA scraps 7pc home loan buffer

The Australian Prudential Regulation Authority has written to banks proposing the 7 per cent serviceability buffer on home loans be removed, in good news for borrowers and the property market.

Wayne Bryes says: “The merits of a single floor rate across all products have been substantially reduced.” Louie Douvis

APRA’s serviceability buffers were introduced in December 2014 as a way of tempering the runaway housing market.

They required the banks to assess all home loans against a floor of 7 per cent or 2 per cent above the rate paid by the borrower, whichever was higher.

Most …