If the Reserve Bank increases the cash rate by 25 basis points at its next meeting, as it is widely predicted to do, then the cash rate will be at a 10-year high. Scary? Not for those of us who recall cash rates in the late eighties, when the mortgage rate stood at 17.25%pa.
I hope that those days will never be seen again. High interest rates, coupled with (or because of? Or as a cause of?) "the recession we have to have" saw many people unable to maintain their mortgage payments, and forced to sell their homes on an already depressed and over-supplied housing market. Countless people put their homes on the market, only to find they had to accept sale prices which, after agent's commissions etc were paid, weren't enough to repay their debts to the banks. Not that the banks suffered - they never do. Mortgage insurance made sure that the difference was paid, and that the customer's debt to the bank was cleared. Instead, the ex-homeowners owed the debt to the mortgage insurance companies.
Sometimes my job really sucks. I tell myself that I'm helping people make the biggest,most rewarding purchase of their lives, but in reality I'm helping them to take on the biggest, most life-changing debt they're ever likely to carry. And would Madam like a credit card with that?