The news tonight quoted economists saying that the RBA will lift rates 4x this year, and soon Australian’s will be paying double digital interest rates.
The Recession We Had To Have Mk 2 is around the corner.
Consider that when interest rates last peaked, housing was that much more affordable. The place I spent my teen years in Sydney in cost my folks $120,000 in 1987, the sold it for something like $250,000 in 1994. The same house today would be worth something like $1-1.2million
Even if we look at more humble property, average house prices vary from $300k-$600k in the capital cities, most people with mortgages will owe on average 70-80% on that. Recent figures I read suggested that the average mortgage in Australia was now $305,000 or similar. 1 or 2% on top of what they’re now paying is hundreds a month, even 3 figures a week. People will bleed, people will lose.
The solution: not entrenching RBA independence as Rudd has done, the RBA are to blame here. Take it off them. So what if inflation is slightly above 3%, we can sustain 4-5% fairly reasonably. The RBA is going to destroy middle Australia, and as much as the economic conditions are mostly the Howard Governments fault, Rudd is the guy who can fix this, and he’s not going to.