Two newsletters ago on 21 October 2010, I cautioned readers to think about issues affecting the property markets before popping the bubbly on Melbourne Cup day. The Reserve Bank pre-empted a bucking of the form book by defying analysts predictions today and raised the official cash rate by 25 basis points to 4.75%, the seventh rate hike since October 2009.
Therefore, it should not come as a shock that Bart Cumming’s favourite pedigree So You Think failed to win the Cup as much as the Commonwealth Bank’s decision to raise their standard variable home loan rate by 45 basis points an hour after the announcement. Notwithstanding their 2010 net profit of $5.7 billion and CEO Ralph Norris’ salary of $16 million, we should not be suprised the bank is crying foul that rates need to go up due to rising cost of funds.
On the one hand, this decision demonstrates the strength of the Australian economy on the back of economic gloom in the US and Europe. It also underlies Australia’s decreasing dependency on the US as our major trading partner with the Australian dollar moving to a high of 99.89 US cents during the afternoon trading session.
Then again, who gives a damn about interest rates on a day where glamour and celebration takes centre stage. What’s a day in spring racing without champagne and frolic, albeit under dark and gloomy Melbourne weather. Then again, perhaps it may well be this dark and gloomy stage in 2011 upon which we reminisce the 2010 Melbourne Cup, albeit with much cheaper plonk in the glass.
For those nursing the Melbourne Cup blues both in the head and wallet, I have compiled the most competitive standard variable rates and fixed rates per Rate City’s top 5 to be as follows:
1. Carrington National Online Power Home Loan – 6.29%
2. Collins Home Loans Standard Variable – 6.37%
3. Match Home Lonas Altitude Loan Variable – 6.38%
4. State Custodians Standard Variable – 6.39%
5. Homestar Finance Superstar – 6.47%
1. Heritage Building Society – 6.89%
2. Holiday Coast Credit Union – 6.97%
3. Resi Mortgage Corporation – 6.98%
4. Greater Building Society – 7.09%
5. MECU – 7.09%
It may be good to nudge your bank to see how much it will cost to switch but do remember there will also be establishment fees for the new loan in the new bank, they get you either way. Just like the Melbourne Cup, even if you don’t get hit in the wallet, celebrations would have given the head a beating by tomorrow morning.
- Statement by Glenn Stevens, Governor on Monetary Policy Decision, 2 November 2010