Which is why you have to look at absolutes.
With absolutes, the calculations remain the same. Cash rate -0.5%, mortgage rate 1.9%, Bank makes the same absolute ($$$) margin as 0.75% cash rate and 3.15% mortgage rate. Or 10% cash rate and 12.4% mortgage.
Did you know that drinking two large glasses of wine or two pints of strong beer a day triples the risk of mouth cancer? Apart from the implication that I’m on my fourth reincarnation isn’t that a mind terrifying statistic? Until you realise that the risk of dying of mouth cancer is 2.5/100,000. So for every 100,000 people, 2.5 will die of mouth cancer. 99,997.5 will die of something else. 0.0025% die of mouth cancer. Triple that, it becomes 0.0075%. But wait - the original 0.0025% includes smokers. If you’re a non-smoker, the risk is 0.00075%. Triple that, and you’re back to 0.0025%.
Of course, bearing in mind that the same level of alcohol intake can reduce the risk of dying of heart disease by 40%, and the death rates for heart disease are around 25,000/100,000, whatcha gonna doo?
Absolutes vs, percentages. Check them both out.
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