The ANZ Bank decided to stay with the other big 3 and hike their rates by .18% which will bring their standard variable to 5.56% (without any package discounts)

Westpac was the lead bank to break ranks and raise rates by .20%, followed by CBA with a .15% hike and then NAB joined in with a .17% hike and now most of the other smaller bank behind these 4 have got on board the rate hike band-wagon and started raising rates as well.

All of the banks have stated these increases are solely due to the need to offset costs they have incurred due to tighter regulatory requirements. The Treasurer, Scott Morrison said that the banks rate moves were “commercial decisions” but he also did happen to mention the “handsome” returns the banks made.

To quote: “They do receive a handsome return on the their equity, our banks, that’s a good thing, haven’t got an issue with that”

And I guess neither should us mere mortals out there in the big wide world, should we?

Yes, we certainly live in very interesting times, especially when it comes to the financial services industry (in general) here in Australia.

It’s literally a moving target each and every day when it comes not only to interest rates we pay for the money we borrow, but with the policy changes to every thing from the loans through to credit card, deposits all the way to the big-gun being superannuation.

Wow! You’d never get bored with all these changes, would you?

All that being said though, we do enjoy a healthy and robust financial system here in Australia which overall, should be a benefit to us mere mortals.

Lets wait and see what’s next for the ever-changing face of the Australian financial markets.

The post ANZ last of the big four banks to raise interest rates appeared first on Precision Advisory.

Recently when the first of the big banks, Westpac, increased rates by .20% the betting on the RBA to lower rates straight away went up to 40%.

Now that the other banks have followed Westpac, the markets are now heavily punting that the RBA will need to respond and offset some of these bank-led rate rises by reducing the cash rate yet again.

Of course the banks have blamed their need to hike the rates on the banking regulator (APRA) who has put pressure on the banking system by requiring them to hold costly additional capital against their loan portfolio.

This in turn meant that the cost for strengthening our already world-leading banking system had to be worn by either shareholders or banking customers. Of course, the bank boards were never going to upset the shareholders, so the costs are passed on to the customers in one way or another.

Now if you asked the banking executives they’ll say the rate increases are simply offsetting extra regulator costs they now have to adhere too however, many banking analysts have calculated the loan hikes will result in an earnings bump of somewhere between 2% to 3% to the banks bottom line.

As it is, Australia already has an extremely strong banking system which none of us should complain about by any means but it’s important to remember, this come at a cost.

So, watch this space come Tuesday 3rd November on Melbourne Cup day and place your bets on a face running, good looking pony…and the banking suits from the RBA.

The post Melbourne Cup and the RBA – Place your bets! appeared first on Precision Advisory.