Reserve Bank Governor

Philip Lowe is probably the most hated man in the country right now. The RBA raised interest rates again yesterday.

Mr Lowe explained why this had to be done. Inflation is still not down to where the RBA Board believes it should be. It was not helped by the increase in wages recently granted by the Fair Work Commission.

All this worries me for many reasons but I also believe Mr Lowe and the Board had no choice. We Downunderites are living beyond are means. We have done so for far too long.

Before the rate hike yesterday I was doing my quick daily check of the (not) available real estate on this side of the city. As I scrolled down the page my eye was caught by a house I know. It is the house on the corner of our street, the one in the opposite direction from which I usually travel. Even the neighbours had not mentioned it was for sale but there it was with an "open" yesterday morning.

I did not bother to go and look of course. I don't want a house. I most definitely don't want a house with a swimming pool. It would also be so far out of my price range it would be ridiculous to believe I could even buy it for half of what is being asked.

Later still in the day I asked someone who knows the people currently living in it what was going on. I had my suspicions - and I was right. They cannot keep up the mortgage repayments. The house has had some lovely "renovations". The pool was put in. They put in an outdoor entertaining area and more. On top of that there are three cars, "his", "hers" and "his toy" - a massively expensive sports car. Yes, both of them go to work in high paid jobs but the person I was speaking to told me, "They can't afford the mortgage repayments. If they hadn't done so much to the place they might have got by."

I wonder how much they will lose - because they will lose unless they are very fortunate. I doubt, and my informant doubts, they will get what they are asking. Rates are likely to go up again and again. I wonder who will be able to afford to borrow at the same levels as people have in recent years. 

P...., who comes and washes the floors for me, and I looked down the street. She moved into their new home about eighteen months ago. They are slowly doing the things that need to be done and she said, "They want too much. We have what we need and we will get the extras later."

I could only agree. Is some bookshelf space a necessity or an extra? I need to think about that.