I got such a hard time for my John Key comments by Johnny-Johnny at www.umami.co.nz that I promised him I’d try and find a more balanced argument to ‘reflect’ the other side.
John kindly pointed out to me an NZ Herald article where Helen Clark appeared to be confused about whether mortgage rates were going through the roof or not. I saved the link in my Google Notebook and have only just read the article in it’s entirety.
Here’s the quote which piqued Johnny-Johnny’s interest:
A transcript of the interview shows she suggested plans by National would require big cuts to the public service and would see “your mortgage rate going through the roof because the system couldn’t stand it”.
The presenter responded: “It’s going through the roof with your lot.”
But the Prime Minister dismissed that: “Well no, no, it’s not going through the roof.”
Questioned again, she went on to explain that inflation was “just right on top” of the Reserve Bank’s target band, and was “similar to where things are” in Australia.
Sorry Johnny-Johnny but I have to agree with the Prime Minister that mortgage rates are NOT going through the roof. House prices might have been (look here), but mortgage rates aren’t…indeed there is talk of interest rates reducing before the year end, and if the stats are to be believed house prices are also falling, or at least levelling.
I’m a baby boomer. I bought my first house in 1988 when an interest rate on a first mortgage was around 16.5% (They had peaked at 20.5% in 1987!) There was no such thing back then as a fixed mortgage (they were introduced in the late 90’s), so we were always at the whim of the banks. Take a look at the graph on the Reserve bank site.
I think mortgage rates have a long way to go before they reach the levels of the late 80’s – and I think if they did reach those levels then they would indeed be ‘going through the roof’.