Governor, RBA, 'sorry for those who have just taken out a mortgage'
Dec 8th 2003, 9:41 am
#1
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Joined: Nov 2003
Location: Scotland
Posts: 7,949
Governor, RBA, 'sorry for those who have just taken out a mortgage'
Bank boss 'sorry' for homebuyers
December 8, 2003 - 4:06PM
Reserve Bank Governor Ian Macfarlane feels sorry for Australians who've just taken out a mortgage.
But he makes no apology for the decision to jack up interest rates twice in the past two months.
The RBA lifted the official cash rate from 4.75 per cent to 5.25 per cent in two quarter point hikes in November and December - with the increases passed on by banks.
Mr Macfarlane told a federal parliamentary economics committee in Brisbane today it was done in the national interest and rates had merely returned to "normal" due to Australia's strong economic growth.
Mr Macfarlane said it was always better to have a healthy economy with normal interest rates "than a sick economy with low interest rates".
Although sorry for the impact of rate increases for some people, he said lower rates had also hit other members of the community such as self-funded retirees.
"I feel sorry for people who have just taken out a mortgage and interest rates go up," he said.
"But you can't really make a policy on the basis of that.
"Similarly, when we were putting interest rates down I had a lot of letters from self-funded retirees saying, 'look, this is really going to be tough on us'.
"At the end of the day we have to make the monetary policy decision that's best for Australia."
Mr Macfarlane denied that the move for higher rates was aimed at dousing Australia's overheated property market.
He also rejected suggestions that the rise in interest rates had helped push up the Australian dollar, which was benefiting from a falling US currency.
The core to the RBA's monetary policy, he said, was ensuring inflation stayed within an average rate of between two and three per cent.
Interest rates went up in twice in mid-2002 and there was a 16-month gap between the next rise in November this year.
Mr Macfarlane said early rate rises avoided more in the future.
"We believe in the system we have," he said.
"They go up early and because they go up early they do not have to go up too far."
The RBA governor faced his six monthly public grilling for the first time today in Brisbane.
The House of Representatives economics committee has taken the RBA chief on a regional roadshow in recent times with hearings as far afield as Wagga and Warrnambool.
But there was a glitch in the Brisbane hearings from state parliament when the expected audio and internet feed failed.
A Telstra line fault was blamed for denying interested traders and news services access to the live audio feed for the first hour of the three-hour hearing.
- AAP
OzTennis
December 8, 2003 - 4:06PM
Reserve Bank Governor Ian Macfarlane feels sorry for Australians who've just taken out a mortgage.
But he makes no apology for the decision to jack up interest rates twice in the past two months.
The RBA lifted the official cash rate from 4.75 per cent to 5.25 per cent in two quarter point hikes in November and December - with the increases passed on by banks.
Mr Macfarlane told a federal parliamentary economics committee in Brisbane today it was done in the national interest and rates had merely returned to "normal" due to Australia's strong economic growth.
Mr Macfarlane said it was always better to have a healthy economy with normal interest rates "than a sick economy with low interest rates".
Although sorry for the impact of rate increases for some people, he said lower rates had also hit other members of the community such as self-funded retirees.
"I feel sorry for people who have just taken out a mortgage and interest rates go up," he said.
"But you can't really make a policy on the basis of that.
"Similarly, when we were putting interest rates down I had a lot of letters from self-funded retirees saying, 'look, this is really going to be tough on us'.
"At the end of the day we have to make the monetary policy decision that's best for Australia."
Mr Macfarlane denied that the move for higher rates was aimed at dousing Australia's overheated property market.
He also rejected suggestions that the rise in interest rates had helped push up the Australian dollar, which was benefiting from a falling US currency.
The core to the RBA's monetary policy, he said, was ensuring inflation stayed within an average rate of between two and three per cent.
Interest rates went up in twice in mid-2002 and there was a 16-month gap between the next rise in November this year.
Mr Macfarlane said early rate rises avoided more in the future.
"We believe in the system we have," he said.
"They go up early and because they go up early they do not have to go up too far."
The RBA governor faced his six monthly public grilling for the first time today in Brisbane.
The House of Representatives economics committee has taken the RBA chief on a regional roadshow in recent times with hearings as far afield as Wagga and Warrnambool.
But there was a glitch in the Brisbane hearings from state parliament when the expected audio and internet feed failed.
A Telstra line fault was blamed for denying interested traders and news services access to the live audio feed for the first hour of the three-hour hearing.
- AAP
OzTennis
Dec 8th 2003, 9:51 am
#2
Just Joined
Joined: Nov 2003
Posts: 18
interest rates are still at a below neutral setting despite the two recent 50 basis point increases. the property market has been working on the greater fool theory for the last 12-months in Australia - and any fool could have seen that. the real world's a tough place, particularly when it comes to investment. If people end up getting burnt because they bought property over the last 12-months well, really i think they've no one else to blame but themselves. notice how auction rates have declined sharply in the last 1-2 months in particular - that's not due to actual increease in interest payments from the last two rate rises - rather its a sentiment issue - or more accurately fear and greed. let the hot air go out the market - then at least some first home buyers might have an opportunity to live somewhere else than campbelltown
Dec 8th 2003, 10:01 am
#3
Rocket Scientist
Joined: Aug 2003
Location: Dreamland AKA Brisbane which is a different country to the UK
Posts: 6,911
*muttering "crash, damn it, crash!"*
