Interest Rates Up Or Down?
  • 17 December 2016

Interest Rates Up Or Down?

There is a concerted media push to panic people into believing interest rates are going to rise. I don't believe they will.

ASIC has pointed out - and they are alone in this - that the banks have the capacity to drop in line with the RBA and should drop. Your Club has always stated the same. The chart here shows the huge profits they are now pocketing compared to when there was competition.

private-sector-credit-20161217

Thanks Mr Rudd for creating the banking monopoly! The Treasurers since, including the current one, are not putting pressure on the banks to continue the long trend of passing on interest rate cuts in full.

The next move will be down because of the GDP (Gross Domestic Product) or your wealth. It came in at negative 0.5%, which is a whopping change of 1.2% from market expectations.

gross-domestic-product-20161217

This was a clear warning sign that the chairman of APRA should be terminated and like Trump, a business person with coal face experience installed in his place.

This person could end the credit squeeze that is so evident by the above chart, with the credit squeeze so obvious.

Turnbull is hanging on by one seat that can disappear if a coalition MP retires or unfortunately dies. This means Turnbull must turn his attention to the economy. Sustained no wage growth. A steady trend of falling retail sales. The huge drop in residential construction that was supposed to replace mining jobs - until APRA came along!

retail-sales-yoy-20161217

Finally, our banks have the capacity to lower rates. They have fixed low rates in for the next ten years. They have steadily replaced short term funding with this much safer long term funding.

At APRA's urging and the RBA, the banks have been fattening their margins at the expense of investors. Turnbull should reverse this or lose his position.

So I guess the question really is, is Turnbull listening?

When there is bad news there is always balancing good news. The good news for us property investors is that this APRA inspired shortage of supply is pushing up prices - the exact opposite of what this incompetent beurocrat was trying to achieve.

Kevin Young Club Founder

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