Posted: August 04, 2006

Better off when rates were 17%

When interest rates were 17 per cent under Labor in the late 1980s, the average mortgage holder was better off than now.

The average new mortgage in Australia is now $222,200 and the yesterdays' rate hike will mean a monthly repayment of $1,685. This means that mortgage repayments will now be 28.2 per cent of the averaage household's disposable income.

Go back to June 1989 when the mortgage rate was 17 per cent and the average home loan was $66,700. Average monthly repayments were $959 then and consumed 25.8 per cent of income.

The situation is much worse also because of the huge loans that have accompanied the recent property boom, especially in Sydney.

This seems to be misunderstood by politicians on both sides of the fence but should temper the Government's claims that they are the better economic managers in terms of interest rates.

Blog entry posted by bill