psssst wanna borrow some money question mark

Whatever you do pay OFF all debt!!

The yellow stuff is getting ever so closer to hitting the fan!!]


Gold of course is not yellow!

Yellow stuff is for fools!!


ADELAIDE Bank will tomorrow become the first Australian bank to raise home-loan interest rates because of pressures created by the US subprime crisis as the Federal Government takes a step back from the controversy.

Adelaide Bank sent an alert to mortgage managers last week warning that rates on some wholesale mortgages would increase from Wednesday. The increases are of 0.25 percentage points and span full documentation and low-doc loans.

Mortgage managers distribute mortgages. However, rather than claiming a commission, as brokers do, mortgage managers acquire mortgages at wholesale rates and charge their own margins.

The bank's statement says fully verified standard home loans obtained through its own South Australian branch network will not be affected.

But expectations are rife that the increases will now spread across lenders.

"Obviously there is both political and market (share) mileage in putting it off as long as you feel you can … but I think it is inevitable that they will all jump on the bandwagon," said Argo Investments managing director Rob Patterson.

The arrival of a new government has also softened the environment for rate increases from the commercial banks. In October, then federal treasurer Peter Costello said there was "no reason at all why an Australian bank would have to move a standard variable mortgage interest rate as a consequence of what happens in the United States".

But yesterday, new Prime Minister Kevin Rudd made a dramatic change of tack.

"Can a government of itself mandate what individual commercial banks do by way of their interest rates? No," Mr Rudd told ABC radio. "In a market economy banks will make their own determinations on that." He also said: "But I would draw their attention to the fact that working families are already suffering a series of interest rate rises; are already under financial pressure."

Adelaide Bank's announcement came as investors discount the likelihood of an official interest rate rise emerging from this morning's meeting of the governors of the Reserve Bank.

Credit Suisse, which runs a daily tally of investor expectations, yesterday put the chance of a rate rise today at just 2%.

However, new inflation figures suggest the RBA could raise rates again as soon as February. In the 12 months to November 30, the inflation gauge rose by 3.6%, the highest year-end inflation figure since March and well above the 3% ceiling of the RBA's target band.

Banks "securitise" long-term loans by accumulating them and selling shares in the pool as bonds or other debt securities with short maturity dates. Yields on short-term money have blown out as failing loans in the US have made debt investors wary.

As a result, banks have been paying more money just to maintain their loans.