Interest Rates

Now I have vacated the job of helping edit news.com.au, let me reveal my dreadful desire to write an almost unthinkable headline: “Rates hike means more gain for savers”.

It’s pretty well inconceivable that any major media outlet would lead with this sentiment for fear of alienating all the hard-pressed homeowners, the millions of working families and Aussie battlers feeling the pinch in the ever-tightening mortgage belt.

This holds true from the most rabid reactionary radio shock jock, through the marching minions of Murdochdom (I am yet to hand back the company-issued electric shock collar), to the fairy floss fops of Fairfax and even unto the ABC commissars of collectivist cant.

Continue reading "Come on RBA, get those rates up you good thing" »

Update 3pm: The RBA surprised everyone and left interest rates on hold today.

In recent years a horrendous new phrase has appeared to describe people struggling to make ends meet. They’re suffering from “mortgage stress.”

This week it was reported almost half of the young people who availed of the Rudd Government’s increased help for first-home buyers were suffering from this terrible condition. If true life will get a whole lot more stressful for them over the coming months as interest rates return to normal, starting most likely with a Reserve Bank announcement this afternoon.

Where did this “mortgage stress” phrase come from, anyway? It sounds like some kind of psychological disease that should be covered by Medicare. As far as I can tell what it actually means is you have borrowed too much money.

Continue reading "Are your stress levels going up with interest rates?" »

At first blush today’s employment figures are an early Christmas present for the federal government. Some 30,000 jobs were created in November and the unemployment rate, against expectations, crept downwards by the tiniest of notches.

But there won’t be any champagne popping in the Cabinet room. There’s a worrying trend beneath the figures: the mining states, which you’d assume are leading Australia’s unexpected economic performance, are actually shedding jobs. It’s the states in the southeast - previously the laggards - where the jobs are being created.

So [the run-up] to Christmas Eve will be a nervous one for Kevin Rudd. Santa could be preparing a big sack of trouble to chuck down his chimney in the form of the national accounts which come out on December 24 16 and should give a clearer indication of any weak spots in the economy.

Continue reading "The one Christmas present Kevin Rudd doesn’t need" »

As a child, my parents read to me the classic childhood tale of the boy who cried wolf, a tale that cautions against repeatedly claiming danger when there is none.

Last year, businesses throughout the world experienced danger associated with the global financial crisis.  The risk of a catastrophic collapse of confidence was very real and to the credit of the Australian Government, and other governments around the world, there was quick action to restore investor confidence.  The stimulus package might not have been perfect, nor was it always directed in the best way possible, but it did its job.

But if you have been listening to the banks of late, you might get the sense the crisis has not passed, that profitability is under grave threat and that interest rate margins are too low. I dispute this.

Continue reading "OK banks, you’ve had your fun with interest rates" »

So banking is like bananas.  And facing a storm like the tragic one in Queensland a few years back that hit banana growers hard.  Or so says the following Westpac video.

Some people think it was silly.  Condescending, even.  Maybe they think a disaster caused by banks isn’t the same as one caused by nature.
Me, I don’t think it’s silly. Like Forrest Gump said, life is like a box of chocolates.  Except now it’s like a banana smoothie.

Continue reading "Westpac: Yes, we have no bananas" »

Over the past few years Westpac CEO Gail Kelly has been the lucky beneficiary of some of the mushiest anti-journalism in the land.

Going back through the clipping files is, to use a cliché, a veritable orgy of cliché. Kelly has been hailed as the supermum, the platinum-haired beauty, a woman of steely resolve, who is always immaculately turned-out, a passionate advocate of work-life balance, someone who is quietly reinventing the way business is done with a more compassionate, family-minded approach to corporate conduct.

When she was appointed as CEO in August 2007, one female journalist shouted excitedly at the press conference: “There’s hope for us yet!”. There is hope you yet, girls, if your idea of equality is seeing female chief executives demonstrate that they can be every bit as foolish and as flint-hearted as their overwhelmingly male equivalents.

Continue reading "So much for Gail Kelly’s innate feminine compassion" »

It’s time for a hard conversation about money. Some Australians, it seems, have literally bet their houses on interest rates staying at the current record lows.

There’s a stock-standard way of reporting the outcome of a Reserve Bank meeting in which the board decides to leave the target cash rate unchanged. You’ll have heard it on radio: “Homeowners can breathe a sigh of relief after the RBA left interest rates on hold”.

But with interest rates as low as they are, any homeowner who is really holding their breath waiting for the RBA decision these days is, quite simply, living beyond their means.

Continue reading "If rate rises are hurting now, you need a smaller house" »

There were lots of memorable lines in Tony Abbott’s first press conference as Liberal leader yesterday but there was one you can expect to hear repeatedly ahead of the next election, whenever that might be.

``Each and every interest rate rise over the next 12 months is due to the irresponsible spending spree of the Rudd government,’’ he said.

There you have it. Kevin Rudd is going to be made to own each and every 25 basis point rise in interest rates between now and the next election - including the latest one yesterday.

Continue reading "Here comes Tony" »

Evidence is now mounting that last week’s Newspoll poll showing a seven point drop in Labor support was a rogue result, with Essential Research’s weekly tracking showing no movement in the two-party preferred vote.

The Essential Report, that has Labor comfortably ahead 59-41, follows on the heels of Monday’s Herald/Nielson poll that was also steady.

Beneath the headline figures there are some intriguing sub-plots, with the public going close to welcoming the increase in interest rates, while continuing to rate the Prime Minister down on his handling of the asylum seeker issue.

Continue reading "It’s a blip – Rudd maintains lead with interest" »

UPDATE: As of 5pm all four banks have already passed on the interest rate increase.

For the second time in as many years, the Reserve Bank has helped cement the banking community’s reputation as a cuddly bunch of warm-hearted funsters by using Melbourne Cup Day to stick it to home-owners.

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While you were munching on some prawns the RBA increased rates from 3.25 per cent to 3.5 per cent, resisting the temptation to go for a much more dramatic and painful 0.5 per cent rise, but still sticking by its warning that there would be more more pain to come.

Many people with mortgages will shrug this one off – we’re still about $700 a month better off in terms of repayments than we were when the GFC hit.

Continue reading "Kevin Rudd does not want to own these rate increases" »

Whatever the reason, Kevin Rudd can take no comfort from today’s Newspoll showing a seven-point turnaround in the standing of Labor and the Coalition in the past fortnight. The poll comes as political strategist and Punch regular Peter Lewis writes today that a majority of Australians thinks Rudd is weak on border protection, according to the latest Essential Media findings.

The PM’s nightmare scenario is that there are three factors at play - disapproval at his “tough but fair” line on asylum seekers, disquiet over his economic management ahead of today’s dead-cert interest rate hike, and a sign that some voters are growing tired of the hitherto unassailable Teflon Kevin.

Unless the Newspoll is a blip, Labor is facing the almost unbelievable prospect of a nail-biter election with a two-party preferred lead of 52 to 48 over the Coalition. We’ll throw the commentary to you - what’s your take on it?

Wayne Swan went on the front foot this afternoon in response to the 0.25 per centage point interest rate rise the RBA has just announced.

Before Joe Hockey could race to the back of the NSW Parliament to accuse the Government of being responsible for the rise, Mr Swan predicted he and Malcolm Turnbull would try to pin it on him and the Prime Minister.

“Never forget that if the Liberal Party has their way Australia would be in recession right now,’’ Mr Swan said. ``For the Liberal Party to claim now that interest rates can stay at record lows is simply laughable and demonstrates their lack of any economic credibility whatsoever.”

Continue reading "Interest rates: who’s to blame?" »

Update 2.35pm: The RBA has just announced it has raised the official cash rate by 0.25 a per centage point to 3.25 per cent.

The Rudd Government is yet to make a hard decision. But this won’t stop them leaving the heavy lifting to someone else - namely Glenn Stevens at the Reserve Bank.

Whether the RBA decides to lift interest rates today or on Melbourne Cup day, this will be a hard decision. It will mean increased pressure on family budgets and small business.

For the more than 200,000 Australians who have bought their first home recently, it will their first Rudd rate rise, with more to follow.

Continue reading "We don’t want to join the high interest rates club" »

Last Friday I continued a tradition of my predecessor in Cook, Bruce Baird, by catching up with one of our more prominent Shire constituents at Tatterstalls Club in Sydney.

The occasion was a public hearing of the House of Representatives Standing Committee on Economics, which Bruce used to chair. The constituent was none other than Reserve Bank Governor Glenn Stevens. The Shire conspiracy over economic management in Australia continues!

As usual, reports of the proceedings narrowed in on the key question of where rates are headed. Sadly, the answer is up,  by as much as 2%. This was not a major revelation as the Governor had already flagged this view in the Bank’s August monetary policy statement.

Continue reading "When rates go up again, who will Rudd blame then?" »

No pay rise and no relief on the mortgage. It hasn’t been a banner day for Kevin Rudd’s working families. But that’s the price of prudence.

The Reserve Bank’s decision to leave interest rates unchanged at 3 per cent was no real surprise. Not much has changed since the nine board members’ last met in June, certainly nothing to convince them that the time was right for a little extra economic stimulation.

The Fair Pay Commission’s decision to deny Australia’s 1.3 million battlers a pay rise was a little more unexpected. The ACTU argued strongly for another $21-a-week hike to the minimum wage.

Continue reading "No payrise, no rates cut, no joy for working families" »

If you’re searching for your first home you’d better find one this week, and you’d better have a healthy deposit, and you’d better hope your job’s secure, and you’d better pick the right suburb and don’t think about relying on the economic downturn to help you out.

No pressure but the Commonwealth Bank and BIS Shrapnel have in the past couple of days butted into the dreams of thousands of Australians and promptly turned them into a nightmare.

Contrary to all dining table predictions BIS Shrapnel today said house prices will go up 20 per cent over the next three years. This as CBA raised its fixed rate, after last week being the first to break ranks and lift its variable rate. Expect the rest of the banks to follow at a respectable distance, as soon as Wayne Swan stops holding press conferences to talk about team work and heavy lifting.

So prices are going up, rates are going up – and you can’t even get the friendly guy from the bank to take your call. And guess what, it’s your fault.

Continue reading "First home dream turns into a nightmare" »