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Beast Homes


against the fluctuations of global money markets.


Six months on since initial im- pact and with experts unsure of when the cost of funds will return to normal levels, the major banks decided to stop absorbing 100% of the increased cost and pass some of it on to consumers.


The credit crunch first hit our shores back in July 2007 impacting immediately on non-bank lenders, most notably the subsequent demise of RAMS resulting in it being snapped up for a song by Westpac...


Adding to mortgage stress worries is the RBA’s meeting on February 5, where the same experts are touting another rate rise. As the latest rate rise was done independently of the RBA,


Why Did The Banks Raise Their Rates? By Michael Newman


he National Australia Bank (NAB) was recently the first major bank to raise their standard variable interest rate independently of the Reserve Bank of Australia (RBA), the first time this has happened in more than a decade.


T


The communal outburst of expletives from mortgage owners was heard nationwide upon the announcement, as consumers try to make sense of the latest rate rise.


Banks claim the independent rate hike is due to the continued increased cost of funds (price at


94 • the Beast


which banks buy money to sell on to us), caused by the global credit crisis in the fallout of the US sub-prime meltdown.


The credit crunch first hit our shores back in July 2007 impact- ing immediately on non-bank lenders, most notably the subse- quent demise of RAMS resulting in it being snapped up for a song by Westpac.


The impact was not as severe for the major banks, however, as they have massive deposit bases which on average provide half their funding requirements and which insulate them somewhat


will the industry analysts be right or will this independent rise by banks be enough to dissuade another RBA rate hike? As reported in last month’s column on fixed vs variable loans, fixing your loan is a simple way to ensure that rate rises do not effect your loan repayments, providing peace of mind for the borrower.


To find out more or to discuss your individual home loan op- tions please call Michael New- man from Investor Finance on 9328 2774 or visit www.investorfi- nance.com.au.


www.thebeast.com.au


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