Treasurer Wayne Swan had challenged the major banks to pass on the latest interest rate cut in full. Only ANZ decided to pass for giving households a “fair go” and ANZ customers benefiting from this decision. ANZ pass rate cut by full 25 points to 6.8%. NAB remains the lowest player in the market by 6.7% followed by Westpac with variable rate to 6.89% and the Commonwealth bank, lowering its mortgage rates by 21 points.

ANZ Australian Chief Executive Philip Chronican said, “Home loan customers are doing it hard at the moment and passing on the full RBA rate cuts was the right decision in the circumstances.” NAB, Westpac and Commonwealth are not passing on the full rate cut. The Central Bank tried to lift confident in economy by lowering official rates. More rate cuts are expecting for coming months and I think Australian Economy is in good condition now because of high growth figures and strong jobs.


Tags: anz, Banks, Rate Cut

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The Australian and New Zealand Bank or commonly known as ANZ Bank is one of the four largest banks in Australia. ANZ was the last bank to passed interest rate. What are the reasons why? What was the sagacity behind this decision?

According to Financial Economist and Director of Yellow Brick Road Funds Management, Christopher Joye, “ANZ has copped flack for its attempts to decouple from the RBA and it will likely be the last bank not to pass on the full 50-basis-point cut.” ANZ unilaterally jacked up rates in February and April 2012 and only increased 6 basis points. ANZ stands out in terms of cost and price margin of products. ANZ decided to delay the rate cut maybe because it can chisel back a few points of margin it needs to over the coming months.

 


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We all know that Reserve Bank of Australia (RBA) decided to leave the cash rate on at 4.25%. But among the big four banks, National Australian Bank (NAB) has the lowest standard variable rate at 7.22%. Westpac currently offers 7.36% and Commonwealth is 7.31%. Among these Big Four Banks, only ANZ raised its variable interest rates for retail and loans by 7.36%.

According to ANZ Australia Chief Executive Phillip Chronican, “The decision to lift rates was made because of intense pressure on retail and business banking margins.” The rate rise will add $6.50 per fortnight to the average home loan of $280,000. Because of the rate rise, 85% of ANZ customers are already ahead on their repayments and they will not need to pay more.


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Australian and New Zealand Bank announced last 10th February 2012 that it will increase interest rates for variable rate mortgages and small business lending by 0.065. We remember that last December, ANZ was the only bank who passed Interest rate Cuts and unfortunately the Interest rate cut didn’t happen. ANZ’s decision regarding this review, really increased competition among banks for consumers and business deposits. Effective last 17th of February 2012, ANZ’s new standard variable mortgage rate was 7.36%pa. The intense pressure on retail and business margins are one of the considerations why ANZ came up this decision and also because of the increased competition among banks for consumer and depositors.


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According to latest Property Council of Australia (PCA)-ANZ Property Industry Confidence Survey.” Property Market participants have more confidence in and growth expectation for Australia’s resource-rich states and territory. Based on the PCA-ANZ, there was increasing divergence in property industry confidence, the national level increased from 104 to 107 in December in which the neutral level is 100. The Northern Territory is the biggest jump in confidence and the highest rating followed by Western Australia and Queensland. The residential property values improved strongly in Western Australia and Queensland and have gain in North South Wales. The property industry expects the RBA to cut interest rate in early this year and ANZ expects house prices to ease further but we need to cautiously optimistic view and tightening of the Australian housing demand/supply balance.


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The Herald Sun reported the “big four” have barely ceded market share since Treasurer Wayne Swan launched a stinging attack late in 2010 and pledged to redraw the competitive landscape.” The four banks namely Commonwealth Bank, Westpac, National Australia Bank and ANZ are increased their mortgage by $61billion and among the four banks, the major lenders account for 86.7 of the home loan market. Based on the Australian Prudential Regulation Authority figures show the major banks have &926 billion of North of home loans from a total pool of &1.07 trillion.

According to Rate City Chief Damian Smith, Anything that simplifies the lending process and encourages greater transparency in the home loans market is a good thing for competition.” To help smaller lenders, the big four banks needs to put more competitive pressure in order to secure the financial system and to provide sustainable flow of credit to households and business. Home loan will depend also if we a better deal with either the smaller lender of the big banks.


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Australian Property Monitors Economist Andrew Wilson expects the tide of turn next year, tipping Perth as the first state to make a comeback in what has been a poor year for the property market nationally. He expects that property values will increase 5-10% next year equal to Brisbane and Darwin in which the said two cities are ahead of the other capital cities in WA. Perth property values shed an average 6% in the year, more that the national average of -4.2%. Property analysts also are predicting that Perth market will begin to rebound next year.

According to Real Estate Institute of WA President David Airey said, “He expects the WA property declines to bottom out within 6 months before a recovery by the middle of 2012. First-home buyers entered the market in which proves that the market has been very strong and it is a good stimulus to upgrade the market.

Head of Property Research at ANZ Bank, Paul Braddick said, “WA’s property bust would bottom out early next year at a $420,000, followed by a “quite strong” recovery.” As we observed, WA has starting to recover and mining sector employees and aspirational home-buyers coming-out to the market, this could well prove that the market has starting to flatten. If there will be higher wages, the stock markets will be recovering, the house price will be increasing, the investments will be improving, so therefore, there will be a confidence to expects that the City will be recovering.


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The following are banks joined to reduce interest rate namely Australian and New Zealand Bank (ANZ), National Australian Bank (NAB), Westpac, Commonwealth Bank and lastly is the Ubank. These are the banks has interest rates dropped out last Tuesday. ANZ has dropped their standard variable rate by 0.25% to 7.55%, NAB has dropped by 0.20% to 7.47%, and Commonwealth Bank has dropped by 0.25% to 7.66%(or 6.86% depending on the product). The Ubank updated their Interest Rate last November 4, 2011, the said bank has dropped their Uhomeloan by 0.20% to 6.59% in line with NAB. They also offered new sign ups a loyalty bonus of 0.20% off their rate taking the rate to 6.39%. These are the big banks dropped interest rate and hoping that interest rate will probably declined before Christmas. Because of reducing Interest rate, the dollar exchange rate its been quite good, investors attracted to invests form of the markets and seeing a slight recovery of financial stability of Australia's Economy.


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Australian House Price trend cannot remain flat in “real” because there are a lot of sectors really affect the Real Estate and we should change and become realistic of improving our standard living status. The Australian Economy released last November 1, 2011 that the annual price for the third quarter  declined to -2.2% and house prices for the third quarter where decreased of -1.2%. According to David Cannington, an economist at Australia and New Zealand Banking Group, Ltd, in his research report, “Conditions in the housing market remain soft.” The report showed that eight cities surveyed house prices fell and among eight cities, Sydney had the smallest drop. Having this information, investors and businessmen should act on how to correct assumptions and prepared whatever outcome coming along the business and the economy as well.


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People in Western Australia are very positive that in house sales will be continuing going strong. Perth transaction sales increased 6% over the last week to 1,026 and it maintained the strengthening trend that started last September. Despite of the high house sales, will house price sales fall or rise?

The Australia and New Zealand Bank (ANZ) with collaboration of Prophell house, “They overall see that prices are settling in most markets and remaining stable in 2012. They are still assuming that there will be no great change in Interest rate even though some markets are rising and others are falling. This view helps to suggests useful reductions in interest rate and lift prices. The ANZ said, “House prices will continue to drift lower over the New Year as increased caution about borrowing takes its toll on home sales.” The ANZ economist Dylan Eades said, “The bank projected that a shortage of available houses and a tight rental market would keep dramatic price falls in check. The same structural shortage of houses will put pressure on the rental market, improving rental yields in a trend that will eventually induce more investors and first home buyers into the market “after” they have tracked sideways and lower for at least a year.” Despite the shortage of housing, house prices unstable and Interest Rate will go up and down, we should something to bear in mind over the next decade, we will have good reason to changed the market.


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