RECORD LOW INTEREST RATES COULDN'T GO ON FOREVER

Amid growing fears of a recession and the Reserve Bank's contentious decision to raise the official interest rate for  6 consecutive months, with more increases speculated to be on the cards until at least well into 2023, it's time to get some things into perspective about interest rates, and not just from the viewpoint of those who have a mortgage in the present day.

Interest rates are cyclic, that's the nature of the beast. They go up and they go down, and for many years, they have been way down. It's been great for those with a house mortgage, but terrible for those wanting to earn a decent amount of interest on their savings. Ask the average retiree who has been earning peanuts on their life savings for the past decade what they think of record low interest rates.

Since the end of the global financial crisis in around late 2009 to the beginning of 2022, Australians with a mortgage have been on relative "easy street" with historically low interest rates for over a decade, compared to, for example, the baby boomer generation. 

Then think back to the late 1980's, under the Hawke-Keating government, when mortgage interest rates broke all the "wrong kind of records" by reaching something in the order of 17 or 18%. 

Keating's "crazy idea" to "slow down the economy" at that time. It destroyed lives, it destroyed marriages and sent so many Australians to the wall financially. 

Even beyond the 1980s, throughout the 1990s and early 2000s, interest rates fluctuated up and down between approximately 3% and 8%, in response to economic factors as well as other factors that impact on financial markets. A prime example of such being the September 11 terrorist attacks in the United States in 2001.

So even where interest rates sit now, and even with a number of further hikes in the official Reserve Bank rate looming, the fact is Australians with a mortgage right now, no matter how much they owe, are on a better wicket than those who had a mortgage between the late 1980s and early to mid 2000s. 

Australians with mortgages have to be responsible, if need be they have to cut back on expenditures that aren't essential, and learn to go without a few luxuries and pleasures in life. The vast majority of us at some point in our lives have to do that. 

Banks and lending institutions should by law be required to provide mortgage borrowers comparative information outlining how much extra interest borrowers will pay according to each incremental rise in variable interest rates on the amount they have borrowed, before the loan is approved.

As it stands now, so many Australians are getting finance for a mortgage and not looking ahead, and not caring, about what happens in a year's time. That often is going to be a very costly mistake.