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CBA raises interest rates

Discussion in 'The Pub' at netrider.net.au started by pringa8, Jun 12, 2009.

  1. Can I be the first to say fvck you Commonwealth Bank. The country and people are doing it tough, and these stains on humanity feel like gouging it a bit more. So it seems not only do banks not follow the drops in interest rates set by the RBA, they totally go against them now.

    CBA raises interest rates

    The CBA's standard variable loan rate will rise to 5.74 per cent
    The Commonwealth Bank has confirmed it is lifting its variable home loan rate by 10 basis points to 5.74 per cent.

    The bank says it has been forced to lift its rate because of long-term funding costs.

    The CBA has also confirmed that some home loans with fixed interest rates will rise by 0.1 per cent from 5.13 to 5.23 per cent.

    Ross McEwan of the bank's Retail Banking Services says the decision has been made reluctantly.

    "We fully understand that any increase in interest rates impacts on our customers and for that reason have continued to absorb as much of the additional funding costs for as long as we could," he said in a statement.

    "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.

    "At the same time, due to intense competition for retail deposits, the cost of deposits compared to the official cash rate is extremely high."

    The rise means that on a $300,000, 25-year loan there would be an $18 per month increase on repayments.

    The official cash rate is now at 3 per cent, with the Reserve Bank having slashed 4.25 per cent off it since last September.

    The Federal Government has previously said the banks should pass on as much of the rate cuts as they can to customers.

  2. Great, no doubt NAB will follow suit. :(
  3. Cold heartless blood sucking flea excrement eating rotten toothed goat hoof lickers.

    ...and that's sugar coated.
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  5. Part of the problem is that people in general don't understand the relationship between the official interest rate and the rates that banks offer. The federal government (well, the RBA to be correct but close enough for my measure) sets the 'official' interest rate but seeing as the Govt don't actually provide loans to either consumers or banks this measure is more of an arbitrary number than anything useful. Often our local banks need to borrow funds from other financial institutions to fund the loans they provide to local home owners and those groups (usually international) can charge a market rate for the money.

    You'll probably find that as there is a hint of stabilisation globally more groups are considering investing in a variety of opportunities so the demand for funds increases. Conversely though many groups that currently have money are still averse to loaning in uncertain times so availability of funds remains limited. Supply and demand therefore indicates that the cost of money (strange terminology isn't it?) actually increases.

    Don't get me wrong, I think the banking industry needs a good shake up with some stronger regulation and an aggressive competitor or two however there is a lot of validity in their statements about the increased cost of long term funding.

    There's only two ways that you can really beat the banks at their game from what I've seen. 1. Don't borrow money. 2. Buy shares in the banks so that at least you're getting something back from them!
  6. Or their profits this year aren't as hot as those from last year.

    Even if they do have to borrow from overseas, the most likely place they will borrow from is an american bank. Last i heard, their interest rate was roughly 1.5%, which would definitely be eating into CBA profits.

    Sorry if i come across overly cynical about this wonderful company that loves its customers.

    On the bright side, given they are increasing interest rate on home loans, they can increase the interest rate on my bank account. Yeh, that I can see that happening soon.

    edit: apparently the rates on their term deposits have gone up. not netbank yet though.
  7. their profits will be buoyed by millions upon millions of $2 ATM charges.

    if they lost anything on investment due to the GFC its their own fault, investing by nature involves risk.

    their advantage is that they can offset that risk by stinging their consumer base.

    I do not approve. :evil:
  8. I'm with Lilley. I don't buy the bs of it costing them more. Its completely about increasing profit from last year. I don't know exactly how it goes but AFAIK the reserve bank interest rate in Australia is higher than in most other western countries. Additionally, does not the RBA lend to the banks? If funds are being sought from overseas and their "official" reserve bank interest rates are lower than here in Australia then how can it possibly be forcing the banks to have to absorb costs and it be costing them more? Again, I don't know details but conceptually, it sounds like bs to me.

    Surely the margin is at least 2%. That's 2% for doing nothing - they borrow because you want to borrow from them and they add at least 2% to it for a home loan. For any other types of loans (personal loan, credit card), it is far more than that. Seriously, how hard is it to make money when that's the set up? CBA has the most home loans in the country than anyone else by a long way. They have something like 50% of the market. Considering that their overall profit is up, how can they state that they need to put up the rate due to costs?

    Fragbait, if you were their employee, you'd probably have bought the bs that Normandy Mining was sprouting in the late 90s of the gold price being down so times were tough. Forget that they hedged their gold price for 5 years into the future at what was around double the rate at the time. You know, there was a squeeze due to the gold price and there was no way they could afford to pay their people any more because of that. Just like the banks nowadays, it had nothing to do with increasing the profit margin of course. Now check this, on the notice board every month you'd see that the cost for getting the ore out of the ground and eventually turning it into gold bars was something like $250/oz and the price they were getting was around $700/oz. The next joint down the road under the same banner was doing it tough with their production cost of around $375/oz. Yes, that's a tough operating environment.... just like the banks have at the moment. :roll:
  9. Thankfully I have left those mainstream bloodsucking, good-for-nothing, bleed-me dry, don't-give-a-hoot, fee-raising, bend-me-over, gutter trash banks!

    RAMS 4 me :)
    I have been with CBA, NAB, ANZ all left me with a bad taste in my mouth and a huge hole in my pocket. :evil:

  10. Why is it that if any of us had a business and we made a bad decision then we'd have to wear it yet the banks simply increase the interest rate to suit? For the banks, its a case of "we stuffed up so you wear it". They are a business as well. They should wear their stuff ups with a lower profit, just as any other business would and does.
  11. Sh!t isn't it. But at the end of the day, it's the consumer that can make a difference, but most wont and some cant change banks.
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  13. People need to keep this increase in context... rates are still just about the lowest they've been for 40 years.

    Suck up the 0.1% increase and keep paying as much as possible off your home loan now before the real increases start to come into play over the next couple of years.
  14. great, just when I bought the house the interest goes up...ffs.

    phong =P~
  15. I would have predicted ANZ to put theirs up first, they seem to be involved in every investment firm that has failed.

    Im sure as things stabilize the rates may go up slightly, as zrx says they are lowest have been in many years.
    Its just they were the first that it makes big news despite it only being a small %
  16. criminals, sorry a few billion in profit is not enough, its time communist bank customers show people power and join a credit union
  17. The Commonwealth Bank is a business, every element of which should generate a profit. There is no reason for it to reduce its margins or incur losses on its portfolio of loans unless competitive pressures force it to do so. You can all complain about banks not offering interest rates below that which competition would dictate when you all start paying the banks a little more than is required at the end of your loan, because the same generosity should be extended to the banks as are asked of them.
  18. A business should also respect its customers. When you start taking customers for granted, they might think about moving to where they will be valued.
  19. As a matter of fact, each of the major banks has greatly increased its share of the residential mortgage market in the last year.

    Those who were foolish enough to change their mortgages to the major banks, in the thought that there was a risk of the non-bank mortgagees failing, or, more fundamentally, that the failure of such an institution would have caused substantial detriment to them as debtors deserve to pay a premium. Given the amount of people who moved, there is evident willingness to pay a premium for the putative security of the major banks. It therefore lies not in their mouths to complain all the way that they are incurring higher interest costs when they elected to move in order to have that security.

    If you are at least better informed than they are, or granted a mortgage to a major bank before the GFC, all that I can say is: stop thinking, move, and stop complaining. If the most that you ever do is think about moving, and nothing more, there will never be an incentive for the banks to price their loans in a competitive manner.
  20. Deposit holders think that rising rates are good news and may be thinking well done CBA.