Distortion Guaranteed?

While the Rudd government may have moved quickly to provide guarantees for the major Banks during a financial turmoil … the impact of doing so has been disastrous for borrowers.

Right now, these major Banks seem to account for virtually 80% of all owner-occupier loans for property.

As such, the margins they are charging have never been higher — despite the Banks’ protestations of being “squeezed”.

RBA's Dilemma

RBA's Dilemma

Therefore, overall borrowings borrowings have been slowly trending downward over the past six months — because the major Banks have effectively amplified the rate increases handed down by the RBA.

And that means there may be some respite, with the RBA holding official rates at their present level, for the next month or so.

While this may slow down rises in the stock market and the Australian dollar, it will encourage continued growth for the Commercial property. And this is backed up by solid job growth throughout the economy.

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