Banks to raise interest rates
Despite the Reserve Bank of Australia and the government’s warnings against the big banks’ plans to increase the interest rate in mortgage, these banks are preparing to the execution of their plans.
Big bank players are complaining that the margins are being eroded and that an increase in the interest rate is needed. However, the RBA dismissed these complains and cited that there is no clear justification as to why they should require an increase.
Analysts are positive that banks are planning to add another 0.15 percentage points to their original mortgage rates. This, according to UBS analyst Chris Williams, is what these banks are set to add to the 25 basis points increase in rates that the RBA is expected to do on Tuesday.
The Daily Telegraph has already reported that due to the lower rate of building approvals, the Reserve Bank might not be amicable to an increase in official rates until November. This has gotten the bank moving towards pushing their plan.
Even though an increase next Tuesday has been decided on, economists suggest that it might best if the Reserve Bank watch out for some inflation before they push through with their plans. ICAP economist Adam Carr has already expressed that the weak approval rate was unexpected. He is positive that RBA will not be making any increases. The CPI number should be presented first before the rise is made final. He mentioned that the CPI number, due for release later this month might not show promising signs.
He further mentioned that with the low housing numbers recorded in August, accompanied by the bank’s uncertainty over the customers and the global uncertainties, the need to increase has diminished.
The Australian Bureau of Statistics has released figures indicating that building approvals have decreased from 13, 699 units in July to 13, 049 in August. A 4.4 increase in building approval in the year to August has been recorded.
However, the number of job vacancies in August had a 9.8 per cent increase since it was last recorded in May.
