And did it again
RBA hikes rates again increased the cash rate by 25 basis points, bringing it to 4.10 per cent.
rba #philliplowe #mortgage
What’s your thought ?
I see that There will be people selling their house and some becoming homeless
RBA Increased The Rate Again, to 4.1% (June 2023)
rahoolz on 06/06/2023 - 14:46
Last edited 06/06/2023 - 15:34 by 1 other user
Last edited 06/06/2023 - 15:34 by 1 other user
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Can home owners claim home loan as tax deductible?
Yes if you rent it out
But often pass it on through rent increases which of course add to inflation numbers…
With the people receiving the benefit (investors) likely to increase spending.
What investors? You realise higher rates affect both mould incubators (i.e. property) and the sharemarket… right?
You realize people with money in bank receiving interest are investors, right?. They and perhaps bank shareholders are also the investors I am referring to.
No one refers to people who hold cash in the bank as “investors”.
@Ghost47: I just did. What else would you call someone with a tidy nest egg tucked away in a term deposit. A depositor? They are certainly aware of their interest.
100% agree with this. Variable GST would tackle it much more fairly (hitting the biggest spenders the most) and also discourage price gouging by retailers.
I thought it was only me that saw this as a much better way of doing it. Current system takes from one group while giving to another.
Couldn't agree more about raising the GST it would solve the whole issue. The problem is that the people making the decisions are the ones who aren't impacted but the RBA increases so they will never want themselves to be impacted
I'm not sure if it happened but I remember something about a limit being negotiated into the GST laws at the time. Sitting governments are probably to scared of voter backlash to make the changes necessary to give RBA control. I'm just speculating and couldn't be bothered checking the Act though.
@tonka: Yes the political aspect would be a big factor, as we've seen with Albo not going near negative gearing and also refusing to change the stage 3 tax cuts. Media would go into meltdown.
Wouldnt that increase inflation even more?
Could easily measure inflation on net of GST prices and also lower it again once things had calmed down.
Disagree this would hit the lower end of wage earners more then the higher end. Higher taxes would also increase government spending increasing inflationary pressures.
And the current system doesn't?
It would likely be short term and therefore I don't think would impact govt spending greatly, especially if govts were on board with trying to reduce inflation as the goal.
@Brianqpr: The current system stems the flow of money, to all. Increasing GST disproportionally places the burden onto the lowest earners who have less discretionary income, and does little to limit the spending of higher income earners. Higher income earners tend to have larger loans so interest rate hikes tend to hit them harder.
@tomfool: It doesn't stem it to all. Those with no debts and savings become better off.
The lower earners are already being hit the most, as they are the renters or those struggling to buy a home. They also suffer most from the blatant price gouging by businesses, especially our major supermarket chains. 15% profit increases this year, but apparently price rises are all down to inflation and increased costs… Higher earners won't notice or care about that as much.
@Brianqpr: That is the whole idea, to get people to stop spending, promote saving and stop the flow of money.
Approx 37% of property owners have a loan, that is a pretty big percentage.Or are you suggesting that as a society we have a system with 0% interest and we use tax to control control inflation?
What about a bit more radical and let the RBA have an adjustable infrastructure levy similar to Medicare levy and bank into a future fund to spend when they need to heat things up.
@tonka: Who pays it? Is it means tested? What if I'm retired super wealthy, structured my finances to reduce my taxable income.
The problem with taxes and levies is the very people you think you want to target are the ones that don't end up paying for it, and middle income gets stung, the same people getting hit with rate rises.
@tomfool: As I mentioned similar to Medicare. Of course will be subject to same tax minimization issues the rest of the system is until the ultra wealthy get their paws out of the pollies pockets.
My suggestion was meant to be perhaps a more precise tool than the current blind whacking.
There is just too much diversity in mortgage level for the current method not to be unfair. ie Just the Real estate price differences from state to state or region makes it random.
And if anything it targets battlers over the genuinely wealthy that can just carry on spending.
I just don't think it's the same environment as the past when interest rates worked and it would be nice to get a little more clever.
Wealth divide is greater, aging population, mortgages are larger, and the inflationary pressures are different. And there's more products interest only, fixed, half fixed, offsets.
Also curious if the gov't remembers fiscal policies work 2 ways.
Literally the dumbest thing I can imagine. 3% isn’t even high.
No much imagination then?
Add temporary extra tax on non-essential things like $6000 Linea Micra coffee machines for home
https://www.ozbargain.com.au/node/778635but mah coffee flex!!?
Exactly the problem last 20 years , the economy rewards those in debt. THose who are not risk averse pile it and they suddenly looked to be the smartest person in the world. Last 20 years house price stormed up , share market rocket up. CBA worth 3.00 now worth 100… For once things don't go their way.. Seems the sky is failling when in interest rates is ONLY 4.1%.
Regardless of whether anyone deserves to pay more. The question I'm asking is how is this the best tool to reduce inflation when it transfers wealth from only 35% of population to increase the disposable income of persons with savings. Or worse straight out of the Australian economy and overseas. I know a couple of people suddenly getting more interest income (good on them) but they are very happily spending it and it is very disposable because it's additional to their expected budget..
It isn't the best tool, it's the only tool the RBA has.
Governments hesitate to act because they need to appease the biggest voting blocks.
Savers are not better off, inflation is much higher than interest rates because the RBA cash rate is still too low. They are losing wealth.
Inflation is mostly because wealthier older people with no mortgage are spending money with gay abandon. Younger people are suffering and spending less. We should be increasing taxes on the rich to reign in inflation. Instead the Albatross is giving them a large tax cut next year.
Current inflation is predominately about energy prices, rents (caused by supply and exacerbated by unfettered migration).
…and another in July and then another and then pause… and more pause… and more pause till 2024 then maybe one drop for the year. Time to clear out the dead wood.
Only the beginning, here is why…
all the money the government splashed during the pandemic with zero productivity return
all the money the government is splashing on climate change action with zero net return for australia, oh by the way, we're selling our cheap coal to china and india so they can build more coal power pants, while we're forbidden to use our own coal, but pouring billions into renewables coming from our pockets.
Gas prices sky rocket will lead to massive electricity hikes (the two are tied up together), and the cost of everything that uses electricity goes up.
Rent/property prices will continue to skyrocket, as australia takes massive immigration intake (the rich and highly skill ones), in the last 40 years, or about 2% of australian's population. Is there a 2% increase of housing? No, because most builders are going bust.
As a consequence of immigration, we have record low unemployment, which leads to higher inflation.So yes, have you see the number of homesless in LA? UK? like pretty much big cities tons of homeless sitting in tents? it will be the same in australia…
The government, all the MPs have their investment portfolios deep in the property market, so they won't do anything to blow this market at all. Just the rich becoming richer, and the average person becoming poorer, as simply as that.
You forgot a million more migrants, AUKUS and a war and another one around the corner.
They mentioned immigration lol.
Did you even read what I wrote?
"You forgot a million more migrants"Care to cut and paste the part about upcoming immigration impact and the number involved?
We have not had any serious number of migrants since pre covid hence the open flood gates ahead. akak a million more
….you will own nothing and be happy
Did someone say rate hike?
I love it!
We haven't been building enough houses since 2005. Years of inflating property prices, land banking, letting councils ignore the need for density, the lack of infrastructure, it's all coming back to bite us. Not a Labor or Liberal issue alone, just pure neglect.
We should have had a housing boom, but covid, Ukraine war, supply issues, worker shortages and building industry collapses held it all back. Until that is fixed, there's nothing else the RBA can do but raise interest rates and force people to cram into less houses.
The RBA has one job, control inflation using the one big hammer they have.
It's not like we have a shortage of land !
we actually do, the majority of the middle of Australia is useless, there is no water, and you can't do anything with the land, which only leaves the land near the coast.
Which the government won't release because it will decrease value of land and less revenue from land tax.People live in Arabia.
@localhost: They have alcohol, there are more expats than locals in the country, and the laws only apply to Muslims (you just don't drink outside).
When you are rich there are much better things than alcohol.
@peekabooo: One of the biggest gold reserves in the world is in the interior of WA. Consider the fact it's not being mined/developed - that might put into perspective how expensive and inhospitable that environment is to colonize.
@ssfps: Look at a map of Australia. Settlements all along the East coast, east of the Great Dividing Range. Look at WA. The largest state, but the only settlement of any size is in the South West. There is effectively nothing north of Perth. A great desert, the only thing it has of value is minerals.
Australia has a lot of land but most of it is trash, arid, overly hot during the day and cold during the night. Most of the remaining land east of the Great Dividing range is protected National Parks. This prevents Sydney for expanding to the south and north, and forces it to expand to the South-West where the new Nancy-Bird Walton airport is being built.
@RefusdClassification: There is a lot of desert, it's also a big country. Australia has as much arable land as Japan.
The problem is continuously expanding our existing cities - that isn't how other countries have grown in the past, and is causing all the problems with infrastructure.
There is HUGE quantities of land available. Look at South East Queensland for example, enormous amounts of land are unused. A ~20km strip between Gold Coast to Sunshine Coast (with Brisbane expanding outwards, sure) is what is used. Sure, not all of this land is suitable, but to say that you have to go to the middle of Australia to find land is a joke.
Not a Labor or Liberal issue alone, just pure neglect.
Yes, yes, let's ignore the fact that Labor have been in government for what, six years of the last 23? And both times they've had to turn Australia around BUT DAT STILL AINT GOOD ENUFF, YO
7 years. But how have they turned it around? Sure, Labor was vastly better in 2007 than a Howard who was tilting so far to the right he was falling off the edge, but the economy was fine. Howard oversaw a boom in housing prices via looser lending standards and Labor changed absolutely nothing about that when they got into power. Australia rode out the great recession via iron ore sales, not any kind of economic genius.
Their second crack at "fixing" is now. And nothing has been achieved so far, it's gotten gradually worse. But worst of all, there has been absolutely nothing done by this government except let everyone blame the RBA. Where's the pressure on local and state governments to fix land releases? Where's the cutting back on infrastructure projects to put money into social housing? Instead we see Labor states going gangbusters building sports ovals.
The budgie smuggler, Turnbull and the smug shithead were useless and half ruined this country. Voting ScoMo in in 2019 ranks up there with the Emu War in terms of Australian general dumbness. But I expect that of them, that's why I never vote Liberal. However Albo doesn't get off just because he's done nothing and let the steamroller of shit they built keep rolling.
Cut Albo some slack, he has to fix the entire country… can't do that overnight mate.
Just read the news, ScoMo wasted $2B in health funding rorts… $2B just for rorts to buy marginal seat votes…. imaging if we built actual houses with that money!
Albo isn't a messiah. He isn't going to fix things. He is supposed to represent the left faction of the ALP, but he is just as much a neoliberal as LNP politicians are. Albo governs for the top end of town. They own him. The Albatross might have grown up lower class, but he has completely forgotten what it is like to be proletariat and doesn't represent them anymore. He is a class traitor.
What's coming back to bite us is 20 years of capital misallocation, buyers grants and flipping houses.
ubank will give savers 0.15%
Just got an email from ubank with full 0.25% increase in interest rate, on the same day of RBA announcement!
Woo hoo!
Next month I think quarterly wages will come out, if that is heading sharp north again, then you can kiss your rate pause next month goodbye.
Rob Lowe is not going to go down and letting himself be insulted without a fight. At the very least he wants to be seen as taming the inflation.
Rob Lowe?
They mean lobster roe
Good pickup! Phil Lowe. I am not a fan of him btw and neither am I on Glen Stevens. Both introduced the now out-of-control Credit Card Surcharges.
He made Ian MacFarlane the best RBA Governor Australia ever had.
Yes, Rob Lowe. He took our money now lets take his!
Start cramming 40 people into a house like paupers.
start? isnt that typical these day in inner melbourne?
The Reserve Bank Board is doing what they are paid to do, pull the necessary Monetary Policy lever to control a stagnant or heated economy.
I agree with Lowe 100% that the situation will not improve and that people should learn to economise and move in with others.
Unfortunately it will be interpreted as 'out of touch' given his 'NnnK' income, and elitist / let them eat cake.
Nothing is further from the truth, renters you have a very simple choice, pay the asking, leave, or reduce cost by sharing by as many people as necessary to make it affordable.
I have a high-yield investment 4 person tent that could come in handy.
Soon you will be able to rent it out to 8 persons, charging $300 per week each.
no no no
to … 12 people
I can have 3x shifts of people sleeping in there, obs not at the same time.@FoxJump: you guys are waaay off here. I plan on setting up a few ropes (two penny hangover style) but charging about $150 a pop. Stacking vertically can fit much more people in.
nice…just lower our living standards until we resemble a 'developing country'
we'd be worse off without the rate rises
Nothing is further from the truth, renters you have a very simple choice, pay the asking, leave, or reduce cost by sharing by as many people as necessary to make it affordable.
Or, in theory, they could organise and overthrow the corrupt banking cartel that's devaluing their currency.
"I agree with Lowe 100% that the situation will not improve and that people should learn to economise and move in with others"
so until we live in a big dorm room and life is unbearably unlivable. gotcha
so basically america then
The choices are :
1) Pay the asking (aka Market) Rent.
2) Reduce accommodation costs by sharing with the requisite amount of people to be affordable.
3) Be Homeless.Which option would you choose?
we shouldn't accept options 2 or 3 as acceptable outcomes - if we do we have already lost
share housing is great when at uni or studying or have no partner or family
It's a pickle indeed.
I just hope I survive his current storm.Lowe lowe lowe lowe 🤭🤣
Oh mama mia, mama mia, mama mia, let me go!
ya boat gently down the stream,
high,high interest rates,
make me want to scream
People still buying cars left right and centre…. Really man…
Gotta get that SUV!
This is just one of the many signs that there is still too much money floating around in the economy
Thats what blows my mind. Cars have been skyrocketing in price, yet 'average' people are still buying new cars. I think people are still in the mindset that cars are a solid investment since the past 3 years have results in a massively overpriced used car market.
Albo's Australia BTW
Sorry i should have clarified. But the budget is quite inflationary. Lot of money going to the bottom end of town.
Though realistically not much they could've done, it was always going to be perceived as contributing to it.In any case rather disappointing. Culling negative gearing on existing properties (could retain for new builds), heavily taxing vacant properties, limiting short-term rentals would all go a long way to helping the major cause of financial pain in this country - housing. However touching NG is political suicide.
Anyways. I've always though Albo is a decent, genuine bloke. while he does talk about his upbringing as a son of a single mother on disability pension a lot, it does make him at least somewhat likeable. So I look forward to him doing the decent thing and stepping down when the referendum fails, and maybe then we'll get a better treasurer.
Sorry. But the budget is quite inflationary.
Sorry, but that’s not what the RBA are saying
As readers may recall, the furious debate that followed the budget centred on whether it was going to make the Reserve Bank's job more difficult, by prolonging or worsening the inflation challenge.
"I don't think that the budget is adding to inflation, it's actually reducing inflation," Lowe declared.
And another article saying the same sort of thing - https://www.abc.net.au/news/2023-05-24/jim-chalmers-federal-…
Sorry, but that’s not what the RBA are saying
Take everything that RBA says, reverse that sentence (take its opposite meaning), - THEN Only YOU WILL GET THE TRUTH.
Although I am with Labour's policies, I support giving pay rise to the lowest paid workers, and increased pay, when that was NEVER EVER going to happen genuinely under Morrison's or DUTTON's rule. But as tony said we should not be blaming them for these rate rises, THERE IS ONLY 1 institution to be blamed RBA- one who's job it is control inflation, and has CONSTANLTY FAILED in doing so, One who is supposed to have top experts in the country working for the people of Australia - Who ALAWYS GETS THEIR DECISIONS WRONG.
One who is supposed to have top experts in the country working for the people of Australia - Who ALAWYS GETS THEIR DECISIONS WRONG.
When smart and highly education people constantly make the "wrong choice" yet that wrong choice benefits them and their friends, maybe you should ask yourself if they're really just that stupid, or if your understanding of the situation is flawed.
@USER DC: If you go by their goal of keeping inflation at 2-3% then they have largely succeeded in their goal inflation has only once been over 3% since 2002. Its pretty had when they try to do the right thing and the government past and present hands out money like its nothing.
yeah it's sooooo deflationary that's why they kept the stage 3 tax cuts
yeah it's sooooo deflationary that's why they kept the stage 3 tax cuts
Cool so just moving the goalposts because what you stated as fact is wrong. Great argument.
I see that There will be people selling their house and some becoming homeless
That will be a very small minority.
What’s your thought ?
My savings account will be loving the extra interest!
I see that There will be people selling their house and some becoming homeless
LOL read the news corpse media much?
Investors borrow too - so they too are affected although any increase is tax deductible.