Here is an article from the SMH. The interesting thing is that the RBA and the banks in australia, being in such good shape, as compared to their british and US equivalents, have been able to help the home owners here. The rate of mortgage stress has reduced from 900,000 to 625,000. While this is not good, it shows that forced sales are not an issue as has been predicted by many of the idealogical challenged idividuals views towards property.
But i know that these persons will clearly post something minor such as the expected increase unemployment or deflation or FHB stop buying or anything else for them to win an arguement.
Rate move saves banks from consumer backlash Eric Johnston March 4, 2009 THE Reserve Bank's decision to keep cash rates on hold for now gives the Australian banking sector the opportunity to save face.
Had the bank decided to cut rates again, it is unlikely the big banks would have passed on the the move in its entirety, possibly sparking a further political or consumer backlash.
In the past banks have blamed volatile funding markets for a decision to hold back some of the Reserve's interest rate cuts, and this was expected to become an issue again with credit costs running persistently high.
The chief executive of National Australia Bank, Cameron Clyne, last month said it was "relatively unlikely" the banking giant would be able to pass on any further rate cuts in full because of the continuing high cost of raising billions of dollars from credit markets. The Commonwealth Bank, which has the biggest share of the mortgage market, has also made similar noises.
Banks generally get half their funding from deposits, with the rest split evenly between short-term and long-term funding.
Credit markets are still skittish over concerns about bank nationalisations in the US and Europe, and a more recent area of worry for markets has been the prospect of sovereign default risk. This, combined with worries about the knock-on effects if a major government defaulted on its debt, were likely to keep credit spreads near the peaks reached in December, said a Credit Suisse strategist, Adnan Kucukalic.
By making out-of-cycle increases to rates and holding back some of the Reserve's rate cuts last year, banks have been able to claw back some of the losses to their margins.
In the December half the Commonwealth's net interest margin rose 6 basis points from the June half. Other banks have also made positive comments about margins in recent updates.
The Reserve noted yesterday that the Australian banking system remained in good shape and the monetary policy transmission process - the ability for banks to pass on movement in rates - was working to deliver large cuts in interest rates to borrowers.
This contrasts with the US and Britain, where struggling banks have held back most of the rate cuts by their central banks.
Interest rate cuts to date seem to be having the desired effect. An analysis of mortgage stress by Fujitsu Consulting concluded there were about 625,000 households in some degree of financial pain in February. This was down slightly from December and compared with a peak of 900,000 last August.
