Rate Hikes - The Out Of Control Monopoly Continues

It is good to see that one MP has decided enough is enough and has called out the bank greed following their recent in step rate hikes. Their excuse was that the cost of funds have gone up. The RBA, APRA, ASIC and you and I know this is FAKE NEWS. They have already locked in long term funding for the next ten years at low rates based on the ninety day bill rate.

Westpac earned our "crystal ball" award at our twenty third annual conference. Of all commercial economists Westpac were the most accurate on forecasting rates.

Their forecast for the next two years shows the lie from the banks in their FAKE NEWS. Their cost of funds is based on the ninety day bill rate and Westpac has predicted no change in this for the next two years. This blows apart the FAKE NEWS of the banking monopoly claim that their greed is based on a rising cost of funds.

This is simply a lie. RBA know this is false comments but have done nothing. In fact at this recent parliamentary inquiry, as this column noted at the time, RBA's own chart pack on the banks cost of funds clearly showed their costs coming down in step with RBA cuts. ASIC alone pointed out that this should have enabled the banks to pass on a whole 1 per cent in cuts.

1 per cent that is safely sitting in their coffers. 1 per cent that can't be spent by consumers lifting retail sales and job creation. 1 per cent that will soon see 50 per cent going out of the country to overseas shareholders.

As I said in 2009, we're witnessing the biggest transfer of wealth in Australia's history. From the pockets of consumers to a banking monopoly and then to overseas shareholders. Then, we accurately predicted that the previous low unemployment rate of 4.3 per cent would rise because of this lack of consumer spending. We now have two million people either unemployed or underemployed. Thant’s two million people that can't continue to add to the expansion of the economy.

At the time of writing Bob Catter, Federal MP, is the only one to call out this greed. What is your MP doing?

We are in the process of compiling all Federal MP's email addresses to enable you to on send our comments on this now six year credit squeeze on consumers.

Until then how can you fight back? Join our Brokers in sourcing funding from the tiny group of banking opposition. They are hard to find. For example, Aussie Home Loans you think is opposition? Nope! 100% owned by the Commonwealth Bank.

I should start a monthly award for the Club Broker that gives the most business to the tiny banking opposition!

Rates are going to be low for longer but banks will try and frighten you into fixing. The problem with fixing too early is that you pop out in the middle of high rates and all of the low rate saving is washed away with now high repayments to the bank.

The Club's preferred strategy is to wait until rates look like they are going to raise really, on the fundamentals not on monopoly pressure and then fix. So then you pop out of the other side of the rise in rates. You pop out when rates have fallen so then you genuinely pocket a long period of low mortgage repayments.

Again I then though recommend fixing a small part of your portfolio. At the moment, we have non majors who can do 5 years at less than 4.5 per cent.

Let’s see how much business we can direct away from the banking monopoly and in to an introduced competition into the market.

Power to the people.

Regards,

Kevin Young // Club Founder - Property Club