low interest rates: who can you trust

Let's have a little look at the interest rate issue. During the 2004 election campaign, Mr Howard said: “I will guarantee that interest rates will always be lower under a Coalition Government. Who do you trust to keep interest rates low?”

If interest rates rise tomorrow morning and the banks pass on the increase to mortgage holders, it will be seven straight interest rate rises since May 2002 and three rises since the October 2004 election.

For someone taking out an average mortgage, these interest increases mean an extra $650 per month or $7,825 per year on interest payments alone. Have a look at this table. It shows how mortgage rates have moved since April 2002 and the monthly “interest only” payments on that loan.

Date Change in
interest rates Interest payments
on average mortgage*

April 2002 (Rates on hold) $794.88
8 May 2002 Up ¼ per cent $827.38
5 June 2002 Up ¼ per cent $863.93
5 November 2003 Up ¼ per cent $1,076.94
3 December 2003 Up ¼ per cent $1,100.07
2 March 2005 Up ¼ per cent $1,296.49
3 May 2006 Up ¼ per cent $1,400.64
2 August 2006 Up ¼ per cent $1,447.02

*Interest only. Source: Reserve Bank of Australia, Australian Bureau of Statistics

What's more, Australian interest rates are now higher than in:

The United States
Europe
Britain
Canada
Sweden
Switzerland
Japan
China
Malaysia
Singapore
South Korea
Taiwan
Thailand
Chile
Peru
Israel
Saudi Arabia
The Czech Republic
Poland
To name a few.