Some distance away from the squabble about rate cuts being passed on by the banks, a fairly significant assessment from the New York Times of the much broader picture, namely that the property market overall is slowing, and in quite a big way - not a panic yet, but few signs of optimism.
....Data released Monday by the Australian Bureau of Statistics showed that the number of home loans taken out in December had dropped 1.5 percent, the third straight month in which that number fell, and a five-month low....Annual growth in housing credit slowed to an all-time low of 4.5 percent at the end of 2012, a long way from the double-digit pace common in the previous two decades. Indeed, growth peaked at no less than 22 percent in 2004. ....“Most economic indicators remain far weaker than they normally are this far into an interest rate easing cycle, suggesting monetary conditions are still too tight,” Mr. Oliver said.....(here).
The failure to pass on rate cuts is an issue of the banks, but note that it reflects on the banks' own capital weakness.
....Lower variable rates would have a much bigger effect on housing demand, and there are signs that intense competition is driving banks to offer better deals....But the banks are reluctant to ease any further on their own, because much of their funding comes from deposits, rather than markets, and rates on those accounts remain relatively high.....competition for that money is fierce, making it costly. Rates on bonus saver accounts, with higher interest rates, have increased by 2.5 percentage points relative to the cash rate since 2009...
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