Saturday, August 16, 2008

Will the banks pass on the rate cut in full?

I'd thought so. But Ian Verrender in today's Herald thinks not.

An extract:

"You've probably heard all the complex explanations about the higher cost of funds in offshore markets because of the global credit squeeze and been dazzled by talk of "spreads blowing out to 100 basis points".

It sounds impressive and there is no doubt it contains a grain of truth, because costs certainly have risen.

However, the technical term used by most economists for this argument is "crap".

The real reason they won't be passing the cuts on to you is simply that they don't want to, and they don't have to. And if you don't like it, see if you can get your loan elsewhere. Bet you can't."