Why don't banks pass on the full rate cut?

December 14th, 2012

The most recent drop of .25 basis points has not been passed on in full by the major banks. By not passing on the full cut when interest rates are on the decline, the banks take up an opportunity to increase their profit margins without upsetting consumers too much, who are still receiving a discount.

Some industry commentators have claimed that the banks are justified in doing this. The Australian Banker's Association have recently come out in defense of banks, stating they are justified in not passing on the full rate cut, as lending costs have increased.

Simon Müchenberg, Chief Executive of the ABA, stated that lending costs for banks have increased by up to 50 basis points in the last year.

'The Reserve Bank understands the cash rate is just one component of the true cost of banks' funding, and therefore does not expect banks and other lenders to exactly match every movement,' said Mr Müchenberg.

Lending costs for banks are dependent on overseas markets. For every dollar Australian banks lend out, 33 cents must be sourced from overseas. With many global markets still suffering the effects of the GFC [...]

Selling your Home at Christmas

December 7th, 2012

For those with busy jobs, Christmas can be the one time of year when there is time to spare to think about relocating, and to start shopping around. Often, this applies to investors.

Over Christmas, there is generally ten percent less stock on the market than at other times of year. With this in mind, one opinion is that there is more competition amongst buyers, which can mean a stronger result. No matter what time of year it is, there are always those out there that are [...]

The Cost of Household Water

November 30th, 2012

Water is essential to life, and mostly considered to be a free and widely available resource. However, households in Australia and New Zealand spend hundreds of dollars each year on water, and these bills are mostly on the rise. With some experts forecasting a water crisis in years to come and water demand for irrigation, industry, and drinking close to […]

Using Diet to Beat the Blues

November 23rd, 2012

While there are many treatment options for those suffering from anxiety and depression, a current clinical study is exploring the link between these illnesses and diet. While previous studies have sho wn the benefits of particular nutrients, it’s believed to be the first study of its kind in the world. Past research has indicated that nutritional factors can lead to […]

The Wonders and Perils of Online Shopping this Christmas>

November 16th, 2012

With Christmas just around the corner, more and more people are choosing to avoid the rush and go online for their shopping needs. Internet shopping has grown by leaps and bounds in recent years, with online retailers doing everything they can to get new business. However, the recent problems associated with Click Frenzy in Australia are just one example of […]