Rate hike

Originally posted by pintohoo: ↑

the thing that most people seem to miss is that these interest rates are NOT high compared to going back to 1960.

they are actually pretty normal - probably on the low side. God help people if interest rates do go to what we could consider as 'high' in the normal course of events. 'High' - I think one could probably opine would be 10%+ (just opinion)

Before 1960 interest rates were lower, but the world turned in 1960 - perhaps because of the pill, just that one change has had massive social and economic ramifications - and we can't undo that one.

Some insights into interest rates in Australia between 1960 and 1990, though an exact average for the entire 30-year period is not directly stated:
1. Interest rates were generally much higher in this period compared to more recent decades. The data shows that rates exceeded 10% for the first time in 1974 and remained above 10% until 1995[1].
2. The highest point during this period was in January 1990, when interest rates reached nearly 17%[1][5]. Specifically, one source mentions a peak of 17.5% in January 1990[5].
3. Looking at the earlier part of this period, we can see some lower rates. For example, in the 1960s, bank overdraft rates were around 6-7%[3].
4. The data shows a significant increase in rates during the 1970s and 1980s. By the early 1980s, rates had climbed substantially, with one source mentioning an all-time high of 16.50% in August 1982[4].
5. It's worth noting that there was considerable fluctuation during this period. For instance, in just 4 years from January 1990 to June 1994, rates dropped from the high of 17% to 8.75%[1].
While an exact average for the entire 30-year period is not provided, we can infer that it would be significantly higher than current rates, likely in the double digits given the extended period of rates above 10% from 1974 onwards. The period saw a general trend of increasing rates from the 1960s through the 1980s, peaking at the very end of this timeframe in 1990.

[1] https://www.orangefinance.net.au/historical-interest-rates/
[2] https://www.rba.gov.au/statistics/historical-data.html
[3] https://www.rba.gov.au/publications/annual-reports/rba/1966/aus-int-rate-sec.html
[4] https://www.ceicdata.com/en/indicator/australia/long-term-interest-rate
[5] https://www.unloan.com.au/learn/history-of-mortgage-rates-in-australia-where-they-might-go

Expand

the difference is that in the 50's to 90's most mortgagees were on fixed rate. so interest rate rises were less effective.

now with most of Aus on increasing interest we all, well around 80% of people, suffer seriously from smaller increases.

I paid off my mortgage quickly in the 80's/90s..... 12 years. these days mortgages are structured so that even paying large slabs off the capital doesn't get the amount owed down much at all. they make up any reduction of the loan value by applying interest in an obscure manner.