Finance Broker Australia Home Loan Broker

Variable and fixed rates have continued to trend down over the last week with BBSW30 down now to 7.5583% and BBSW90 down to 7.7667%. The 30 day rate is starting to get back towards what we would view as a workable premium over the official cash rate but the 90 day rate is still stubbornly high, although certainly a lot better than it has been.

The move by St George late on Friday afternoon (don’t you love the timing of the banks, perhaps they thought we wouldn’t notice?) to increase their home loan rates by another 20 basis points shows what credit market conditions still imply in terms of the cost of funds and the pricing of risk. We’ve said it before and we maintain that credit rationing is already here and has been basically since December. It will be 2009 before this situation eases up in any material way.

For reference, fixed rates are now ranging between 7.74%-7.98% over the One-Five Years, a drop of an average 10 basis points on last week.

Did we mention the words “choppy and difficult” last week? So it immediately proved with major stock indices going south in a big way through most of last week. It didn’t take much soothsaying skill to pick that one but it does emphasise that things are far from settled and now that the Euro zone has decided to catch the fear bug infecting the US, it all starts to become self perpetuating.

Economic fundamentals are surely turning downwards but we now have the “fear” factor firmly in the mix again but now in relation to both credit markets and broader economic performance. Again, we note the onset of the northern summer can often see an exacerbation in sentiment and we typically observe excessive spikes (up and down) in key stock and commodity indices around this time of year. With hindsight in a few months time, this year will be one for the history books, but the sun should come up tomorrow.