Interest Rates and Politics - What do you think?

[macca]

Boy, we have covered some topics in this thread.

The houses which are for sale for $210k are standard 10-12 sq homes up to 50 years old in the western subs, I know of one couple who own a number of them and are quite happy with the returns and the tenants.

The funny thing is the tenants could afford to buy a similar house if they put their mind to it.

The new release land with the $140k infrastructure charges usually sells for $300k plus and are quite small blocks but have a much better image factor.

In the past the infrastructure costs were recouped by the government over the years via water rates etc but the govt has decided that by charging up front that the developer would have to wear the costs. HA HA HA Needless to say the developer HAD to add it in to the land price, what else could they do ? and so we get $500k McMansions instead of $400k McMansions.

Still, it all boils down to what will the market pay doesn't it, if people don't buy until prices come off, then prices must come off as everything is only worth what the market will pay for it.

 

[nioka]

Hmmm.. Yes, 17 is less than 22.. I'd have to agree with you there..

I don't remember the interest rates ever reaching 22% though.. So I googled and googled, scoured the RBA web site, and everything I found suggests that the rates were about 13% in '82.. including the following part of an article that pretty much sums up who did what and when.. Interestingly the writer of the article appears to believe that the Government has significant bearing on the interest rates. Anyway over to him.. [FairFax, Tim Colebatch]


Buster.

In 1982 my bank o/d rate was 16% But because I needed more funds urgently the bank refused o/d increase but kindly increased my bankcard limit by $20000 at 23.5% which I was in no position to refuse because of drought.
Where was the 13%?????

 

[Buster]

Hey Nioka (Nokia??)

In 1982 my bank o/d rate was 16% But because I needed more funds urgently the bank refused o/d increase but kindly increased my bankcard limit by $20000 at 23.5% which I was in no position to refuse because of drought.
Where was the 13%?????

Alrighty then.. I guess if we were to apply that logic we could say that the current interest rate is 28%.. That is the rate of the GE Creditline card (despite lower interchange fees for credit card transactions in Australia being introduced in '03..)

Holy snapping duck poop!!! You guys are right, little Johnny has been pissing in our pockets for years.. Just wait 'til I get my hands on him..

I expect you'd agree that comparing the interest rate applied by the RBA's monetary policy to a commercial institutions credit card interest rate is more than a little unfair..

As I've said previously in this thread, *I* believe that good economic policy does have a significant effect on interest rates, it's certainly not all just dumb luck.. Sure, there are occasions when all the planets line up and the unforseeable occurs, when things can go either way. However, if the underlying economic policy is sound these 'events' should be little more than a blip on the radar..

As for the 13%.. Just google some old reports, same as I did.. I guess it's conceivable that Johnny and Co have conspired to remove all available information on previous interest rates above the 17% mark that he gives Labor such a hard time about in order to give himself some added credability.. although *I* feel thats terribly unlikely..

Only my opinion..

Cheers,

Buster..

 

[Buster]

I was a Banker for 26 years. Official RBA rates may have been around 13 % in 82 as you said , but at that time all banks were subject to govt legislation that max home loan rate they could charge was 13.5%. To qualify for that rate the bank had very onerous conditions to qulaify eg high average savings balance over 2 years. Very many (maybe most) didn't qualify so the Bank could charge couple % higher than 13.5%, but that won't show in official figures. .

Now that is extremely interesting.. Smurf chipped in above with similar information.. I had absolutely no idea.. I guess I was one of the lucky ones to lock in at 13.5 % back in those days then..

In hindsight if those lending controls were kept in place (savings requirements for loan eligibilty etc) Australia current massive debt may not be such a problem as it is now.

Yes.. Yes I think you may well be right..

Cheers for the response, (You too Smurf!!)

Buster

 

[smoothsatin]

http://www.rba.gov.au/Statistics/Bulletin/F01hist.xls


This is data showing 90 bank bill rates from 1969 to the present. The rate peaked at 21.39% in April 1982, admittidly partly a short term spike to some extent. If there was free floating martgage rates then, it would have been somewhere around 24% perhaps?
Anyway, rates were higher when liberal handed to labor in 80 s compared to when labor handed to libs in 90s.
Ultimately the oil shocks are what triggered the inflation/ rate rises and labours policy changes undid it. Anyway good to have some debate

 

[Smurf1976]

Bottom line is that if the GLOBAL trend in rates is up (or down) then basically nothing will stop that affecting rates in Australia to some extent.

The global trend would seem to be up in recent times, although it's always dangerous to assume that the recent past will continue into the future (especially the long term future as is relevant to mortgage borrowing).

 

[Julia]

I mean current policies too much in favour of big business as opposed to workers at moment. There have been times in past under other governments when policies too much in favour of workers as well. What we need is government for a fair go for everyone. Think the worst thing for the Howard government was their winning control of the senate at last election, ie both houses of parliament, power corrupts.

Thanks for that explanation, Kyme. I agree entirely about the Senate control.

The latest award increase for minimum wage, though, is a step towards redressing the balance somewhat.

Julia