Todays Banks

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Originally Posted by spudboy

Well - I think the interest rates at the moment are not unreasonable.

Luckily I am getting on a bit and have had 30 years to pay off my mortgage, but I remember when I was 20-something and was paying 18% on my mortgage for a while. I think that was thanks to Mr Keating somehow.

What are the rates now? 7% or something.....

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What happens if you lose your ability to repay and that can happen with an accident at work or being made redundant.
Incidentally I own all my properties ( 3 ) and pay cash for everything I buy.I fear for families of today for being at the mercy of the lenders.In my day forms of control were in place and worked well now it's open slather.One good example of de-regulation is the Free to air TV...the number of commercials shown now that they can regulate themselves.

would you believe i have not had an account at a bank since i left school 40 years ago,:) always been at a credit soc

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Originally Posted by Brian Hjelm

Speaking as an investor, not a borrower, I feel the long term deposit rate paid by banks to investors should never be less than 10%. Anything less, after inflation and taxation, is stealing the use of my money.

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Australia has very high interest rates compared to the rest of the developed world. Why should that be the case?

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Originally Posted by spudboy

Well - I think the interest rates at the moment are not unreasonable.

Luckily I am getting on a bit and have had 30 years to pay off my mortgage, but I remember when I was 20-something and was paying 18% on my mortgage for a while. I think that was thanks to Mr Keating somehow.

What are the rates now? 7% or something.....

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Pretty much agree, went through the same experience myself but just to add a little bit more - There was a time when bank interest rates we regulated by the govt. Back in the mid 80s the max interest rate the banks could charge was 13.5% thanks to previous Lib governments. The result - you could not get a bank loan because the cost of money in 1986 was higher than the capped interest rate.

I fronted around 1986 to get a loan to buy some land for a house. Needed about $18k. The bank told me sure, no problem, just deposit $20k and we will loan you $18k at the regulated interest rate of 13.5%.

If people are moaning at the interest rate now, wait till after the pollies have dealt with the public outrage by re regulating the bank interest rate. Instead of hearing them moan in the streets as interest rates go up you will hear them dying in the streets as credit dries up.

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Originally Posted by spudboy

Well - I think the interest rates at the moment are not unreasonable.

Luckily I am getting on a bit and have had 30 years to pay off my mortgage, but I remember when I was 20-something and was paying 18% on my mortgage for a while. I think that was thanks to Mr Keating somehow.

What are the rates now? 7% or something.....

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A bit more than 7%, but historically speaking, the interest rates are at a reasonable level. The problem is rather with most who have borrowed to buy (IMHO overvalued) real estate in the last 5 years are very sensitive to even the smallest of rate movements. Most who have borrowed in the last 5 years are also not old enough to remember the late 80's early 90s, so ability to repay at 18% never crossed their mind (or mine for that matter). Banks should have known better tho, it should have been raised as part of their risk management. Perhaps this is where they came up with the genious idea of "securitising their mortgages" and onselling them to an unsuspecting public, thus letting them wear the risk.

As for Keating's era interest rates, if I'm not mistaken, they were comparable to much of the western world at the time.

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Originally Posted by Offender90

them.




I won't disagree, I'll just ask one question - why?

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Take inflation and income tax and your operating cost (a private company or self managed super fund has operating costs) out of that current 7% dividend and there is not much left. So from the investors point of view you have got bugger all return on your money.

Perhaps this is why so many investors have turned to property in recent years. The capital gain from well selected property has been in excess of 10% for some years.

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Originally Posted by Ferret

Pretty much agree, went through the same experience myself but just to add a little bit more - There was a time when bank interest rates we regulated by the govt. Back in the mid 80s the max interest rate the banks could charge was 13.5% thanks to previous Lib governments. The result - you could not get a bank loan because the cost of money in 1986 was higher than the capped interest rate.

I fronted around 1986 to get a loan to buy some land for a house. Needed about $18k. The bank told me sure, no problem, just deposit $20k and we will loan you $18k at the regulated interest rate of 13.5%.

If people are moaning at the interest rate now, wait till after the pollies have dealt with the public outrage by re regulating the bank interest rate. Instead of hearing them moan in the streets as interest rates go up you will hear them dying in the streets as credit dries up.

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I purchased my first home in1985. This was when interest rates were starting to sky rocket and the government then set a cap of 13.5% for existing loans. Anyone who took out a loan after the cap copped the current rate(around 18% a few years latter)

My girlfriend(later to become SWMBO) and I put together $100 each a week to get $10,000 in 12 months. We found a house which was $65,000.

The bank said that our deposit was not enough. After much haggling we got the loan, but it was two loans, $45,000 at the variable rate(at the time around 11.5%) and a $10,000 home equity loan at 17.5%.

Before you all say how lucky getting a house for $65,000 my take home pay was $240 a week.

Dave

We had to stump up 30% deposit for our first home. The bank would not take my wife's earnings into account. She might get pregnant and stop work. My commission earnings & fringe benefits (car, phone, generous expenses) were not taken into account to determine the amount of loan we could service, only my base salary, about 40% of my earnings. I might lose my job and get a worse one.

Nowadays you can get a housing loan of 105%!!!!

The banks do nothing wrong.....in fact they do most everything right......if you dont like the way their fees affect you, go in and talk to them about how you can reduce fees by changing the way you operate your account(s)......funny thing is , they will do this for you as a free service. You can also have a chat to them about becoming an investor....its really , really simple. They will openly and honestly teach you the error of your ways. Dont fight them, join them.

I didn't read all the responses so apologies if this is a repeat...
As a former lending employee of a big four bank my suggestion to anyone who has a home loan and feels they aren't getting a good deal is to go to your bank and tell them you want a better rate. If you're on a variable contract (fixed contracts can rarely be negotiated regardless of how much your branch wants to help) they have pricing concessions that they can put in place. They aren't advertised, they have to be asked for.
The same for anyone with a Term Deposit - ask for a better rate. Have them call treasury/pricing. Small amounts (under 100k) may not get you anywhere but if you have your super funds in a TD demand better rates. Stress to the bank you have a home loan, credit cards, bank accounts and TDs and you will move them. Banks do panic. Each branch has it's own individual targets and the Branch Manager is under pressure. Ask to see THEM.