Today’s Australian housing crisis is worse than the 17pc home loans of the 1980s, by Caitlan Fitzsimmons.
The advertised rate for home loans hit 17 per cent in June 1989 and stayed there until March 1990, according to Reserve Bank records. It’s also true they were in the double digits for most of the 1980s. …
When interest rates were 17 per cent, the proportion of household disposable income that went on the interest payments for the home loan was 6.1 per cent. It’s currently 6.8 per cent. …
Who has it worse?
I don’t doubt [the high interest rate period of the 80s and early 90s] was painful for anyone paying a mortgage at the time.
I don’t know what it’s like to wake up every few months and find interest rates have been hiked again. I don’t know what it’s like to take a second job just to keep a roof over my head.
I do know what it’s like to wake up every few months and find that prices have gone up by another $20,000. I know what it’s like to spend months going to auctions and be constantly pipped to the post by Baby Boomers adding to their investment portfolio. Like many housing “haves” of my generation and younger, we finally succeeded only because of help from family, and I am truly grateful. …
Those high interest rates of the 1980s preceded the great housing bubble, so survivors got rich:
If you managed to survive the 17 per cent interest era of the late 1980s, then by definition you were already a home owner by the time the 1990s housing boom rolled around. …
Virtuous, or lucky?
Baby Boomers, or indeed anyone who bought a home before 1990, have mostly benefited from being in the right place at the right time.
Research shows successful people tend to underrate the importance of luck in their success. Some beneficiaries of the housing boom think they deserve it, that it’s the just reward for their hard work and thrift. In reality it’s a windfall gain.
Interesting how the article’s author never pondered why interest rates were 17pc in the past — could that happen again? This is a topic the media never question— where does money come from, and why are interest rates set (at the short-term end) by a bunch of bureaucrats?