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True official rates look set to fall but can banks afford to cut when their funding costs are so much higher – Just have a look at whats on offer with term deposits and online accounts offering around 8 per cent banks would have to add their profit margins of around 1.5 per cent meaning 9.5 per cent AND this doesn't include the cost of obtaining funds from overseas which doesn't look like it will change in the next 18 months. IF bank rates drop then official amounts will have to drop a lot more in comparison
I'm one at a loss as to where the property market is heading wages have certainly not kept in line with the increase in property prices, add in petrol and general living expenses. Now we have interest rates at the highest in years, and even if the Reserve Bank start dropping official rates will or can the Banks with funding costs so high drop their rates accordingly All bets are on the credit crisis being around for at least another 18 to 24 months so does that mean banks cannot drop rates for this period – So how can the prices keep going up if nobody can afford them and what about those who overextended when interest rates were low How many are going to be on the end of a forced sale.
