In 2015, Treasury Secretary John Fraser warned that Australia’s largest cities were experiencing a housing bubble. He warned that the major cause of the bubble was low interest rates and access to easy financing for real estate loans. In 2016 the average price of a home in Sydney passed $1M. Former Prime Minister Tony Abbott argued that increasing house prices in cities were a sign that the economy was healthy.
Yes, for loans over a certain amount. It is not fair for a person who has borrowed below $500K to pay higher interest rates and have to survive below the poverty line to meet ends meet. Therefore those whom are on a good income and has borrowed above $500K should pay the higher interest rates. Interest rates should be scale to meet the income.
Interest Rates should reflect econonmic health and spending and should not be used to control the property market. If property is unaffordable, then rent also rises. Shelter is a basic human right and should not be tampered with.
Rather than raising the 'cash rate' which increases the cost of all borrowing, the RBA should have the power to levy an extra charge (like a GST) on all lending for purposes which it wants to quell. Eg if house prices are raging in a certain city, but not elsewhere, increase the cost of borrowing for existing homes only in that a city. This makes new homes relatively less expensive, encouraging supply. This approach can be extended to all manner of borrowing where you want to target a specific sector and/or region
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