Quote:
Originally Posted by Ric
Here's a utopian thought.
It would be fantastic if the government in power passed a law to restrict the banks mortgage rate to only what the reserve sets.
Wouldn't it be great to have a rate of only 4.5% or so.
Unfortunately no goverment is brave enough to challenge them, but I reckon that the government that did would end up in power for the 50 years.  |
Ah what short memories we all have.
Back when I started work in one of the mean old banks, the Govt. set limits on bank lending through the reserve bank by regulating interest rates. It meant that credit was severely restricted. Back in the 70s and 80s customers had to go cap in hand to the Bank Manager and nearly beg to be allowed to borrow money. And the main effect was that banks didn't compete because there was no benefit to doing so.
After deregulation in the early 80s all of a sudden the customer now had some power. They could shop around for a better deal. And we bank employees all of a sudden had to be far more attentive to our customers needs.
Before then the customer had no power as all the banks offered identical products.
I know as I was working in the system at the time.
Price controls never work except very short term or in extreme situations eg war.
Malcolm