Tags: housing affordability

23 Oct 2007, Comments Off on Who do you trust to keep interest rates low?

Who do you trust to keep interest rates low?

Author: Helen

Why, J-Ho, of course! He and Peter Costello have been going on and on and … on about how interest rates are lower than they were under Paul Keating and even if interest rates are going up, well, they’re still lower than they would be in some, well, parallel universe where Labor is governing, and, well, did you know that interest rates are lower than they were under Paul Keating?

I’d got used to this as a kind of background noise while I got on with living, blogging and Howard hating, and it’s such a familiar cornerstone of the whole Liberal edifice, that reading this in the AGE made my brain go sproing:

The HIA-Commonwealth Bank Affordability report shows with house prices surging in the September quarter and higher interest rates, affordability fell by 2.1 per cent, and 8.3 per cent over the year.

First home buyers nationally are now spending 31.7 per cent of their income on mortgage repayments, the highest on record, and Melburnians are spending 30.7 per cent.

But Prime Minister John Howard said the affordability problem had eventuated because the cost of housing had risen sharply in recent years “and it’s risen very sharply because we’ve had very low interest rates and … people have been able to borrow a lot more and buy more expensive houses”.

Wh… whaaaa?… You wha…

So, let me get this straight. The proportion of our incomes going to house repayments is due to … those very same low interest rates you’ve been doing such a great job with?

So, in the Liberalverse, one can simulataneously harp on about the virtues of maintaining low interest rates (although everyone must know by now that the government doesn’t control interest rates any more) and blame the housing affordability crisis on those selfsame interest rates?

This is the same Liberalverse where we need to downgrade our wages (and therefore living standards) to third world levels to “become competitive” with third world economies, so we can, er… maintain our status as a first world country…and where all we need to do to develop our economy is to dig up and cut down more stuff, educate as few people as possible and make as few things as possible. All while foreign debt burgeons and everyone’s in it up to their eyeballs, but apparently that’s not a problem.

Do you see why I have trouble accepting this crowd as the party of responsible economic management?

Crossposted at Road to Surfdom