Margin Loan Interest Rates

Well it has been quite awhile since the RBA dropped rates by 1% and many banks have now passed on this cut, and many are expecting further cuts next time the RBA meets in early Novemeber. Yet there hasn't been any noticeable cuts in margin loan rates as yet, with most margin lender's rates still sitting above 10%.

When do you think we will see drops in margin lending rates? And how much do you think they will cut them by?

Hi Chris,

I just posted on another thread, that my rates have recently been dropped to 9.75% (Suncorp).

They were either 10.35 or 10.25 before the RBA cuts, can't remember which...

Rgds, Chris

I just noticed that Comsec have also dropped their rates to 9.75% - I think they were 10.30%.

So it looks like some of the major institutions have passed on above half of the recent rate cut, but you'd have to say rates are still well short of "attractive" for investors to start looking to releverage themselves back into the market.

So when do you think we will see bigger drops?

I just saw that the CBA has dropped the interest rates for Comsec & Colonial margin loans to 8.99% and 9.10% respectively. Though it would seem that margin loan rates are still sitting well above the traditional level of RBA Cash Rate + 3%. So I imagine they still have some dropping to do irrespective of the RBA's moves.

Margin Loans - RateCity.com.au

Though I'll be very interested to see if these continued drops in the cost of capital don't respark the stock market in the next few weeks. Looking at STW with its current dividend yeild of 9.9% versus 8.99% for capital... its very tempting investment if you are backing that we are close to a bottom...