Do you remember having teachers who would punish the whole class for the actions of one or two? Maybe they’d even ask an offender to own up to some transgression, but when they didn’t, the whole class would be kept in after school or during a lunch break. Do remember how bad detention feels when you haven’t done anything to deserve it?
I remember feeling like a real injustice had occurred. Not only had I not committed the crime, I wasn’t the one withholding evidence. Someone else had done something wrong then compounded the situation by staying quiet when they were given the opportunity to confess. That person or persons would cause the entire class to suffer.
It was wrong then and it’s still wrong today … but that’s life.
I’m feeling a little of that sense of injustice today. I’m not the person who caused our economy to heat up but I feel that I’m being punished with today’s rise in official interest rates. I’m going to have to dig deeper into my pockets for our weekly mortgage payments but I didn’t do anything to cause the rate rise.
Australia’s economy is growing, fuelled by a mining boom, which means there’s the threat of inflation rising higher than the Reserve Bank thinks is sustainable. Essentially, as I read it, and I’m certainly no economist, times are good and there’s a fear that the economy will heat up too much. Increasing interest rates will help cut down on spending, keeping the economy on an even keel. I understand that much and I see that the Reserve Bank is simply trying to follow good economic practices. I get that. What I don’t get is how people like me get ahead in such times.
I’m not raking in lots of dollars and spending too much. I’m not the one causing inflation to rise. I’m simply the guy who is already struggling to pay the bills and keep his family fed. I’m the guy who just wants to pay the mortgage, buy food, pay for the essentials and occasionally have enough left over for a treat or two, maybe even a family holiday. Instead, I’m just getting by and wondering when I’ll get to experience the ‘good times’ I hear about. There have already been huge hikes in the cost of essentials like electricity and water in recent times. My fear is that the latest interest rate rise will punish some people so much that they’ll lose their homes.
I’m thankful that we only have a modest mortgage. To rent a home like ours we’d be paying a landlord more than double what we’re now paying on our home loan. That’s not the case for everyone. A quarter of a percent rate rise has the potential to drive people with bigger mortgages to the wall. These are not people with bigger mortgages because they have massive homes; they’re people who have had to borrow heavily to invest in modest homes at today’s house prices. We had the advantage of entering the housing market quite some years ago so we were able to increase equity as house prices boomed some years back.
I don’t know what the answer is. I don’t even know if there is an answer. As I said, I understand that the Reserve Bank is simply following sound economic processes but when the stick they use to keep inflation manageable is a stick that will deeply bruise many at the lower end of Australia’s economy, I just wonder if there isn’t another way to keep control of the country’s finances.
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Rodney, if i may sometimes we have to lose to win and that is to downsize into a smaller home in a growing suburb. The rule of real estate worst house in best street, this is always hard because the dear wife usually is against this. However, trust me their are up comming suburbs where you can own your own home and then bridge to go where you want to go. If that is where you are now then you might have to tough it out. My fear is that we are due for a massive overcorrection in real estate prices we have seen this in the top end and now it has happened in the bottom end (small 2 bed units in complexes), having said that this is the plight of every working man.
I certainly agree. We’re in a comfortable, not big, home in a growing suburb with a reasonable mortgage. This rate rise won’t put us on the street but it will make things tougher.
I think a lot of people should take your advice and move up to where they want to go gradually. There are lots of young people who have jumped into a mortgage that is way too large to begin with so that they can have their dream home. It’s not much of a dream when you need to work every hour of the day just to meet payments. If they’d started small they’d be on the way to something better rather than struggling.
There are also some families who have started small but the high price of houses has meant that even though they’re in a very modest home, their repayments are anything but modest. I imagine they’re the people that will hurt the most.
You make some good points. I am no economic expert, but it seems to me that the average person is suffering while a nameless bureaucrat makes decisions with no accountability or understanding of the consequence of their decision.
I hear you Rodney.
We are paying rent which is higher than our friends’s morgage, and there for we can’t save enough or fast enough to have a deposit that will keep the bank happy to give us a morgage loan. So we are also just stuck where we are. We felt hubby had no choice than to work FIFO so one day we can also say we have bought our own place.
How long will we have to endure this and put as much money away we can we don’t know but we hope not long because it’s horrible and we both don’t like it but felt we need the security of a home and almost had no choice. With renting we have to move every 2 -3 years and it’s horrible and costly. And trust me, when it one day comes to buying it will also be a modest family home.