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Financial crisis to keep lending rates high

4 minute read
The Adviser

Home lending rates could remain unchanged despite speculation that the RBA could cut rates by up to 50 basis points next week due to the meltdown in financial markets over the past weeks.

Lenders have recently been hit by volatile funding costs and despite the strong domestic banking system, the deteriorating global financial situation poses a major threat to the Australian financial sector.

Speaking on Brisbane radio this morning, federal treasurer Wayne Swan, said the unusual events in world financial markets would make banks’ decisions to pass on rate cuts more complicated.

“What we’ve got here is a substantial event in world financial markets that is pushing up rates around the world and, of course, that will impact here,” he said.

In the normal course of events, Mr Swan said any RBA rate cut should be passed on by the banks – as he’s long insisted – however, “in the situation we're in at the moment, it is much more complicated,” he said.

Published: 01-10-08

What's more important for Australia right now: lenders sustaining profitability or passing cuts to borrowers? COMMENT HERE

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