Will Australia head to negative interest rates? Does that essentially mean savers will need to pay interest charges to banks to 'hold' your cash?
Negative interest rates
AndyRates on 19/03/2020 - 22:25
Comments
You reckon it can happen at this current climate?
Really depends. Its a way the gov uses people to 'flush' the cash out of the bank accounts and to do something.
What will really happen is, we'll have a cash shortage greater than any TP shortage we have seen to date.
At a guess, they'll just lower the saving rate so its 0%, you get nothing on your money.
At a guess, they'll just lower the saving rate so its 0%, you get nothing on your money.
So essentially a lot like savings accounts today.
/sadface
Nope they just print money to cover this, called quantitative easing
that’s why they have banned cash transactions over $10k. Solely done to prevent a run in the banks.
@Ugly: The law hasn't passed yet and has nothing to do with preventing a run to the banks, its all about skimming as much taxes as possible off every transaction ie GST and income TAX.
So wait if this passes, it becomes illegal for me to put my $20k in cash I have under the mattress in the bank? So does that mean the bank will go to jail for accepting my 'cash'.
But you know, I could just go to the bank and get $9k out a day, no questions asked. There is no issue in having $100k cash sitting around. Only spending it in one go above $10k
@c64: Not yet, but the legislation only says the limits and restrictions will be “by regulation”. Once it passes, the minister can then change any of the limits or restrictions at any time without having to go back to parliament.
Japan is doing it for YEARS now
How does negative interest rates impact home loans?
Rates goes lower of course, but there is no chance a bank will ever pay you to get a home loan from them.
So that should mean, I can take the Bank's Money, and look after it for them?
And they will pay me money for looking after it right?Mortgages suddenly became accessible to the middle-class citizens again ; )
Nope, prices go up as everyone wants to buy and get a deal, so like all cuts before people then tell you it’s too expensive to buy. Then if interest rates move back up, you are screwed.
but cba is doing 2.29 fixed for 3yrs
means they don't expect rate rise anytime soon
unless bank starts doing charity
means they don't expect rate rise anytime soon
Gov come out yesterday and said rates won't be rising any time soon for many years. So yep
@JimmyF: Do the math.
Some one buys based on exactly what you say, 2.29% in 5 years time the rates go to 5% (not very high) but that means their interest payments double.
And no matter what wise people think now, many will buy and more importantly bid based on what the costs to them now is.
Add in that when people lose their jobs, the govt can provide some temporary relief. After that….
Cant happen?
Look at history 1988 1973 1960
the rates go to 5%
That problem is always a 'problem' when you RAISE interest rates, regardless.
I use to have a house loan around 7-8%, there was talk the world would end if they raised it to 9 or 10%.
Its always the same story, if interest rates go up = world will end
The comment I was replying to was
means they don't expect rate rise anytime soon
and the reason the banks don't think they will rise anytime soon is simply because the gov said they won't be raising them for a few years. So yes 3 yrs fixed term products are 'low'.
A house loan is a 20-30 year thing for most people. You can't think record low interest rates for the entire period will apply. Yet people max themselves out and then today tonight have all the cry baby stories of people complaining their loan repayment went up $40 with a rate rise and now they have to stop going out or eating food etc.
Banks are to blame, they should stop letting people borrow above their means.
@JimmyF: We aren’t in disagreement, just pointing out exactly the same to the same people you indicate will cry because they don’t realise that even with a 1% increase in interest rates on a 3% loan that’s a lot more to pay.
Expecting isn’t a guarantee either.
As for banks being to blame, yes maybe, but like politicians there is another bank waiting to for your business/vote if you are willing to shop around.
So we are just looking at the level of expected caution from maybe slightly different degrees 👍🏻😀
As for banks being to blame, yes maybe, but like politicians there is another bank waiting to for your business/vote if you are willing to shop around.
Maybe all the above, banks for loaning money to the max as its easy 'profit' for them, and for politicians not screwing down the laws/rules around lending money.
We have pained ourselves into a corner. If interest rates returned to 6% or 7%, the world would really end for most borrows maxed out today on 3-4%.
@JimmyF: When I worked in a large bank I loved showing prospective borrowers what would happen to their loan repayments if rates went up to 1989 levels, ie 17.25%. Oh their faces! g
@miwahni: hahaha gold!!!! I only dream of 17% rates for my saving account, maybe lets start with something a little smaller like 5/6/7% and see how they go!
The effect on Offset accounts will be…
A great chance to pay off your mortgage!
How so?
Change your loan to one of the new low interest rates but keep your monthly payments the same.
Or wait for rates to drop even further, buy a house and go like hell to pay it off 'almost' interest free.@EightImmortals: Ah OK, thought you knew some magic way of paying it off faster like a "get rich quick scheme" :)
I have a fair chunk in my offset, about 50% of the loan, if interest rates keep dropping I might have to look at other ways of using that money.
RBA has ruled out negative rates. It's a useless economic stimulus tool
Doesn't mean they wont do it though. wink wink
Shhhhhh
for those of us with a home loan, or any loan that you can get additional funds into(with redraw), you will effectively get a better result.
we are better off having any cash in our home loan as its an effective way to reduce any interest charges, plus its still available.
Id prefer to get a saving of 3% on interest charges rather than an interest bearing account that tax would be payable on.My partner has a Help debt that is increasing at about 2. to 2.5% per annum, our loan interest rate has been higher, but with whats happening now with interest rates, it may now be better for us to transfer additional funds out of the home loan to pay it out.
I suggest you listen to this report on SkyNews with Alan Jones. https://www.skynews.com.au/details/_6140060824001
Don't try to watch it, that pink suit will burn a hole into your eyes.
you take all your money out of the banks and stash it under your mattress to save on fees and revert back to a cash only economy like the good old days
That's why they have done the "CASH BAN", They knew the economy was going to fail. The CORONA V is a good cover.
Stop throwing money at it and let it fail, it needs too.
Yes, negative interest rates are possible. Does that essentially mean savers will need to pay interest charges to banks to 'hold' your cash? - that's too radical. Doubt it will ever happen.
No, it won't happen. We will have some inflation in about 2 years and rates will start going up. What do you think happens when the RBA prints money?
We will have some inflation in about 2 years and rates will start going up.
That is exactly what has happened.
macquarie have just bumped up the interest rates on their some of their savings accounts
Your new interest rates
Savings Accounts:
We’ll pay 1.35% p.a. on all balances up to $1,000,000. Previously on balances below $25,000 we paid 0.35% p.a. – that’s an increase of 1.00%.
On balances $1,000,000 and above, we’ll now pay 1.05% p.a. Previously we paid 0.35% p.a. – that’s an increase of 0.70%.
Transaction Accounts:
We’ll pay 0.35% p.a. on all balances. Previously on balances below $5,000 we paid 0% p.a. – that’s an increase of 0.35%.
That is what it means! Instead of the banks giving you 'money' to leave it in the bank, you'll have to pay THEM money.
So $100k sitting in the bank at -1% means you have to pay ~$83/m for them to 'look after' your money.