must be the bottom---the know it all property flippers have come out of the woodwork breathing a sigh of relief because they think they are going to make a killing---hang on better read this first---good to check the date of the article as well---lol
""One interesting question is what the major banks now do. The RBA’s cash rate affects all forms of bank funding, one way or another. It directly affects the circa 60 per cent of funding that is sourced from short-term retail deposits. It indirectly impacts the 30 per cent of funding that is originated from the wholesale markets locally and overseas (via its influence on the yield curve). So the question is: do the banks unilaterally raise rates on the back of claims of higher funding costs? I don’t think so. Maybe ANZ nudges its rates up a tiny amount, just to make a statement.
The fact is, however, that funding costs and financial stresses more generally have plummeted in recent weeks. When CBA issued its $3.5 billion, AAA-rated covered bond in January, it paid a price of 1.75 per cent over the swap rate. Today that same covered bond is trading 36 basis points lower at just 1.39 per cent over the benchmark rate.
The broadest possible measure of Australian financial stresses, which is the “credit default swap index” produced by ITraxx, has declined strikingly from over 220 points in November last year to about 140 points today (see chart).
click the image to enlarge
It would be a brave bank to undertake independent margin expansion in the face of this evidence.""
This article first appeared on Property Observer on January 31. Republished with permission. http://www.businessspectator.com.au/bs.nsf/Article/RBA-Reserve-Bank-rates-inflation-february-pd20120207-R97QP?OpenDocument&emcontent_spectators
