Now why would our treasurer say that rates under 10% are still cheap??.....hmmmm
Let's have a little look ourselves since no one wants to publish actual statistics.
Current average home loan: $210000 Average weekly earnings: $980 Current major bank interest rate (prior to todays rate rise): 7.07% Loan term: 25 years
Debt servicing ratio: 35%
If rates were at 9.99% (remember that they are still cheap under 10%) the debt servicing ratio becomes 45%......wow!!!, still cheap.
Cross reference back to 1989 when rates were 18%, the ratio was 31%.
That's just home loans, excluding other forms like credit cards and car loans which were not that common 15 years ago.
So why I ask you Mr Treasurer cannot you foresee any problems with higher rates?
Moto for the day....JUST KEEP BORROWING!....it's all good.
