Kevin Rudd supports tha banks not passing on the full cash rate reduction of 1% by the RBA yesterday.
According to Mr Mortgage there was an expectation by the RBA that the banks would not be in a position to pass on the full reduction, and that in his opinion was the reason for the anticipated 0.5% reduction being doubled to a 1.0% rate cut. So the mortgage belt should as a whole be well pleased with the outcome.
Where this will be enough to kickstart home buyers into making offers on homes in the near term remains to be seen.
I suspect that further cuts will be required to give new home buyers the confidence to move forward in this he feels.
Mr Rudd says he supports the banks' decisions this time, he has also urged them to pass on further cuts if conditions improve.
"As financial markets stabilise we expect the banks also to pass through the rest of the interest rates over time."
However, Mr Rudd conceded that his defence of the banks' position not to pass on the full cut to borrowers may be unpopular.
"My job, and sometimes it's going to be very unpopular, is to argue in defence of the stability of the Australian banking system," he said.
"That means making sure we get these decisions right."
Mr Rudd said "despite worsening global conditions there are strong grounds for Australia to remain optimistic about its economy but there must be a balance between a strong banking system and relief for borrowers."
