Interest Rates Don't Need to Come Down.

aimon on 04/06/2024 - 16:38
Last edited 04/06/2024 - 18:57

I was just watching this video from ABC where they used the term "Higher than usual interest rates" of where we are now. This is very misleading we now have normal interest rates. The 30 year average is 4.14% and we are sitting at 4.35% now.

If anything they should probably be higher to balance out the decade of cheap cash flooding the system.

We need to stop blaming interest rates and start blaming the terrible government policies of both parties that fuelled housing speculation. I don't have anything against investing in property but you shouldn't be expecting public funds for losing money on a deal. It's dole bludging for the rich.

https://www.youtube.com/watch?v=KKtSYbHS5Cw&ab_channel=ABCNe…

https://www.rba.gov.au/statistics/cash-rate/

Financial Interest

Comments

  • ttt888 on 05/06/2024 - 16:40

    Yup. Its scary that people are crying about todays interest rate.. LOL absolute nut case. Imagine when we truly have high interest rates, people will be jumping off buildings. Even 2004-2007 we had higher rates than today.

    • arkanis50 on 06/06/2024 - 11:01

      You might have missed the bit where house prices have double/tripled/quadrupled in that time period?

      That's a bit of hyperbole on my part but house prices in 2004 are in no way comparable to house prices in 2024.

      • ttt888 on 06/06/2024 - 11:37

        Does it matter?
        So in 10 years time everyone will cry if interest rates are over 2%?? And then in 20 years time cry if interest rates are not -1%.. ie. bank giving out money for people to by homes.

  • McFly on 05/06/2024 - 16:45

    I guess Mr Kirkland is too young to have been able to enjoy the mid-teen rates of the 80's…

    • zoombie on 05/06/2024 - 17:17
      +1

      i'd take mid-teens rates of the 80s for a short term (less than 10 yrs) with housing of at 4X income vs todays rate at todays house prices any day of the week. The boomers generation keep telling how hard it was when interest rate was high, what they forget to tell us is that it was temporary. Theres nothing temporary about today's house prices!!

  • sirstiv on 05/06/2024 - 17:14
    -2

    Isn't inflation rich peoples problem?

    • zoombie on 05/06/2024 - 17:18
      +3

      lol definitely not!! it's a poor ppl problem. rich ppl have assets that can easily cover the cost of inflation. poor ppl dont.

      • sirstiv on 05/06/2024 - 17:30

        No it's more along the lines of why should we care? We are poor and the rich people that make the decisions are telling us to stop buying… when they over spend…

        • zoombie on 05/06/2024 - 17:35

          because your money/wage buys less. your $1 used to 1 widget, now it cost $1.50 to buy the same widget. your wage doesnt go from $1 to $1.5 at the same time but the rich have shares/houses these assets rise faster than wage so they can cover that extra 0.50c

          it's definitely a poor ppl problem, not rich!!

        • Goremans on 05/06/2024 - 18:51

          Its not so much rich or poor spending- atm its the boomers that are spending big

          • sirstiv on 05/06/2024 - 22:12

            @Goremans: Boomers are the wealthy for the most part lol

    • aboogee on 07/06/2024 - 15:52

      when the flood comes, people on the low ground drown first

  • Goremans on 05/06/2024 - 18:50
    +1

    Rates are ultimately going to need to go up to 6-7-8% - drip feeding

  • Darude Sandstorm on 05/06/2024 - 19:05
    +1

    We need them to go UP pls asap

  • haemolysis on 05/06/2024 - 20:44
    +3

    Rates are so low there’s barely much to cut. It’s not the rate that is the issue, it’s the value of the loan. So yes, absolutely government policy is at fault and is the only solution out of the mess. Unfortunately however, there isn’t much dissatisfaction. Sure, some media huff but that’s about it. We aren’t seeing riots in the streets, or major protests or anything. Nothing that will cause politicians to incur risk by making major changes. Most people are indifferent or content. Majority don’t want to see the system dismantled or crumble… they just hope they can own a title and be on the winning team. Hence the political discussions are not focussed on systemic change, but just little things to prop up a few individuals like withdrawing super or government backed 5% down payments, and other things that don’t threaten to destabilise price growth. Until there is unrest, there will not be action, and so far, there is basically negligible unrest.

    • larndis on 06/06/2024 - 09:41
      +1

      Surprised this is downvoted, seems to be an accurate summary

  • DrRalph on 05/06/2024 - 20:46
    +1

    Intetest rates wont be coming down significantly in the next 12 months.

  • Nebargains on 05/06/2024 - 23:07

    Hilarious that people think rates should maintain some sort of average over a long period of time. It is a tool the RBA use to maintain inflation in a target band, that is all, it is not a number the RBA set to maintain an average. Some years it needs to be lower to stimulate growth and other years it needs to be higher to cool it.

    • Brick Tamland on 07/06/2024 - 11:13

      Yeah, it's a tool used to encourage or discourage lending which puts money into the economy or takes it out. It doesnt need to be bound by what is an okay amount based on averages

  • Tapori on 06/06/2024 - 00:46

    Why would the Govt not allow interest on OO property to be deductible from personal income instead of only allowing it on investment properties only? Many countries follow this practice, which encourages young kids who are just starting to work to buy properties to save on tax. These countries, incl US, do not have sky-rocketed property prices as we have here in AU.

  • Grunntt on 06/06/2024 - 08:18

    Are threads like this the equivalent of all the old guys sitting in the village square jawboning and thinking they are fixing the world's problems?

    There are so many of this style of question being posted more recently.
    All they turn into is multiple people telling everyone that 'I have the answer' based on opinion rather than real research (I mean real research, not just what you read in your echo chambers).
    Then it becomes 'lets blame some group eg the government, boomers, Gen X, immigrants etc. Then it often becomes personal and insulting.

    Does anyone taking part in these threads actually 'do' anything about the topic of the day.

    These types of threads do nothing other than let people vent and blame everyone else whilst actual doing nothing - sounding very much like the complaints you see here about Whirlpool - did the Whirlpool whingers move over here?

    • Cluster on 06/06/2024 - 09:27
      +1

      It's quite common to see the exact same question posted on Ozbargain and Whirlpool, so it does look like Whirlpool is cross fertilizing Ozbargain.

  • Trying2SaveABuck on 06/06/2024 - 09:10
    -1

    Credit to SEN channel 9 talking about the possibility of IR going up seem to have some common sense there this morning

    we gotta stop funding the propaganda that is the ABC

    rates will remain on hold this year otherwise we might see 1 rise

  • garage sale on 06/06/2024 - 13:18
    +1

    The issue isn't the interest rate, I've paid 18% as part of my life BUT the cost of a house was 4 x yearly wage so wasn't vast amount I borrowed compare to what I earned. Fast Forward to 2023/24 and the cost of a house is more than 4x yearly wage so have to borrow more, take into account compounding and a small shift in rates % have a big impact in how much needs to be repaid from that yearly wage. It's the cost of a house that is the killer … if it was still 4x yearly wage in 2023/24 people would't care about the rates.

    • aimon on 08/06/2024 - 16:45

      Yes but lower interest rates leads to people borrowing more and pushing up house prices. They are related.

  • tessel on 06/06/2024 - 14:13
    +1

    Mate, preaching to the choir. I don't mind seeing 7% rates. Yes, I'm willing to sell a body part or two to watch things burn. This Ponzi has gone on too long.

  • umoddbro on 06/06/2024 - 17:29

    Gives us higher rates! I'm enjoying the interest income…. sadly everyone is in debt and the government only caters to the masses.

  • Lunarboogie on 07/06/2024 - 19:45

    Most folk forget that the RBA rate must be higher than inflation or else it's actually a negative rate.

    So if CPI is 3.6% (as it is now) and the cash rate is 4.35%, it's a real interest rate of only .75%.

    That makes the current rate not much higher in real terms than in 2021 when CPI was 0% and the cash rate was .25%.

    From that perspective, the current rates are remarkably and should actually increase if the RBA is serious about taming inflation.

  • Eeples on 07/06/2024 - 23:25

    1 in every 10 houses in Australia are empty.

    1 in every 4 households contain 1 person.

    There are plenty of houses in Australia.

    • Eeples on 08/06/2024 - 08:37

      Sorry for sharing facts.

    • aimon on 08/06/2024 - 16:46

      Yes. Both are part of the problem. Like the cause of this. It's never just one thing.

  • JIMB0 on 09/06/2024 - 08:07
    +1

    They should jack up the rates and watch the world burn for borrowers. It's only fair as savers had to endure super low rates for many years following the GFC.

  • gfjh567gh3 on 19/06/2024 - 14:24

    ZIRP has allowed 'zombie companies' and other non-productive companies to perpetually roll forward debt and keep the doors open
    It has also opened the doors to ESG lending, which once again promotes non productive, non market driven companies and policies, particularly hiring people that are not just unproductive, but COUNTER productive to people just wanting to do their jobs and keep the wheels from falling off the bus

    All this money 'printed' has to find a home somewhere, and eventually competes with your hard earned dollars to buy things, including essentials and commodities.

  • KITT888 on 20/06/2024 - 21:24

    Sorry for the ignorance.

    But do they want us to support businesses by spending when spending will worsen inflation?

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