Feeds:
Posts
Comments

Posts Tagged ‘Prime Minister Kevin Rudd’

Treasurer Wayne Swan has taken aim at Australia’s biggest home lender, labelling it selfish for lifting its mortgage and business lending rates.  swan_rudd_hand_400

Other banks have refused to rule out following the Commonwealth Bank of Australia’s (CBA’s) surprise decision to lift its home and business loan rates by 10 basis points to offset higher funding costs.

The opposition said the government’s huge debt burden was putting pressure on interest rates, while a prominent market economist said it may force the Reserve Bank of Australia (RBA) to cut the official rate again to counter any impact from CBA’s move.

CBA said it took Friday’s decision “reluctantly”, but at a standard variable mortgage rate of 5.74 per cent, up from 5.64 per cent, it was still the lowest on the market.

The rate hike will add $18 a month to repayments on a $300,000 home loan over 25 years.

The bank said it had absorbed as much of its additional funding costs for as long as it could.

“Unfortunately, we have seen the bank’s wholesale funding costs remain high and continue to increase as previous long term funding matures and is replaced with new funding at significantly higher cost,” CBA group executive of retail banking services Ross McEwan said in a statement.

Such reasoning drew no sympathy from the treasurer.

There are ups and downs when it comes to those decisions over time, but there are few decisions I can think of that are more selfish than this one,” Mr Swan told reporters in Brisbane.

“I think Australians, rightly, will be furious with the Commonwealth Bank.”

Prime Minister Kevin Rudd echoed those sentiments during a speech to a business lunch in Brisbane.

“We are all in this together – businesses, workers, government and the Reserve Bank – and today’s decision by the Commonwealth Bank runs counter to this nationwide effort,” Mr Rudd said.

The other three major banks – ANZ, National Australia Bank and Westpac – said their rates were constantly under review.

NAB said it had no current plans to raise its home loan rate but noted “all Australian banks” had been incurring significantly higher funding costs for some time.

Opposition treasury spokesman Joe Hockey said the government was putting pressure on interest rates by running up a huge debt.

“Kevin Rudd and Wayne Swan feigned outrage about this interest rate increase, yet they are directly responsible for it,” Mr Hockey told reporters in Sydney.

“This is the beginning. You will end up with higher interest rates directly as a result of the spending binge of the Rudd government and the massive debt they are accruing.”

Home buyers may be enjoying the lowest mortgage rates in 41 years, but have already missed out on about 30 to 40 basis points of the RBA’s total 425 basis points of official rate cuts, with banks refusing to pass on the cuts in full because of the cost of funding.

For small businesses it has been even worse, being short changed by about 140 basis points.

The CBA’s decision comes in a week that saw massive boosts to both consumer and business confidence, as well as data showing sustained growth in home lending – sucked in by low mortgage rates and a more generous first home owners grant.

April mortgage data showed loan demand has grown for seven straight months to a 14-month high, as well as record demand from first home buyers and the strongest interest from investors in nearly two years.

It also showed that the banks have cornered more than 92 per cent of all loans – a 33-year high.

Westpac chief economist Bill Evans said CBA’s decision could well be countered by another cut by the RBA.

“If it does have an impact, particularly on confidence in the housing market, which has been the most encouraging source of recovery in the Australian economy, it may bring a rate cut back on the table at the Reserve Bank,” Mr Evans told Sky News

Source  :  www.thedaily.com.au

Advertisements

Read Full Post »

With the increasing interest in Britons looking to migrate to Australia, the   perth
health of the economy down under is an important topic.

Prime Minister Kevin Rudd will deliver his 2nd Federal Budget on the 12th
May and he is expected to spend big in order to stimulate the Australian
econ0my that has slowed but not been devastated from the current Economic
Crisis.

In his first budget last year, PM Rudd promised to follow the previous
Howard Government’s prudent economic practise of positive budgets and had
forecast a A$21bn Surplus. Then along came the economic turmoil of 2008 and
PM Rudd went on a massive spending spree to keep the economy afloat and try
and avoid the first Australian recession in over 14 years.

So far this has seemed to work with only a 0.1% retraction in the Australian
economy in the December 2008 quarter, and we can expect to see some major
spending and incentive programs announced in this years’ budget aimed at
further invigorating the Australian economy and maintaining it as one of the
worlds safe havens.

This could be good news for Australian property investors and intended
migrants, that continue to enjoy favourable access to finance and prices
that have stayed firmer than many other countries, including the United
Kingdom, but have come off to offer true value in the current market.

SMATS Group Chairman, Steve Douglas, will be conducting his Annual
Australian Budget Review Seminar in London on the 9th & 10th June and it is
an opportunity for UK based Australians and English citizens with an
interest in Australia, to hear a full analysis of the Federal Budget and
discuss how it may impact on their personal situation.

This seminar is part of a world tour for Mr Douglas who presents this
seminar in Asia, Middle East and the Asia, Middle Eas tand USA as well. “This annual event has
proven popular as we endeavour to explain the complex issues announced in
the budget in simple English that anyone can understand and then discuss how
it may influence property and financial markets so people can use the
knowledge to their advantage.”

SMATS Group is the largest firm in the world assisting Australian Landlords
and Intended Migrants with their Australian Taxation & Finance requirements.

www.australiamagazine.co.uk

Read Full Post »