Interest rates stayed static yesterday, but in a rare break with etiquette two Reserve Bank Board members have indicated that inflation may force the Bank to push rates higher – possibly as early as next month. The May Reserve Bank Board meeting will be held a week out from the Budget. A rate rise wouldn’t be a good warm-up. The PM and treasurer would be forced to retreat in a storm of bottles when they took to the stage – bottles thrown by people who were voting Liberal just six months ago.
And they might have other reasons to be angry. There’s not only dangerous fine print in mortgage contracts – but maybe also some worrying subtexts. There might be further science to housing affordability other than what gets called the dismal science, economics. ABC Radio’s Ockham’s Razor show devoted a recent program to the issue just last weekend.
“A few academic economists have been voicing concern over the past decade that Australians’ capacity to buy a home is eroding. Some have predicted that in future only half of Australians will own their homes, down from just over 70% today,” it said.
Alun Breward, a housing industry economist working with the state government of Victoria says the finance institutions “come up with affordability measures that suit their marketing department.”
He describes bank housing affordability figures as “a textbook example of the abuse of statistics”. Read the details here.