Clive Palmer Right about Interest Rates (Well Half, but More than Other Pollies)

lethological on 07/05/2022 - 12:07

Seeing the yellow billboards promising 5 years with interest rates fixed to 3% everywhere I am shocked to be thinkibg Palmer may be onto something.

But in usual fashion he's in way too deep for it to be meaningful.

I believe a 3% Cap on interest rates is a good thing for a subset of loans. If our goal is increasing new home ownership and supporting housing affordability.

The catch I think that is missing:
This should only be for first home owner or net portfolio of less than 1 million.

This would provide the safety net for those that need it the most. While allowing market forces to operate upon those that have made poor financial decisions and motivate a deleveraging of their positions.

What does OzBargain think?

(Personal disclosure this limited enrollment to the cap would not benefit me personally)

Poll Options

  • 426
    Lazy Fair, let the market do it's thing
  • 36
    I agree with Palmer
  • 28
    Prefer a limited cap for those vulnerable
  • 21
    Other
Financial Federal Election

Comments

  • loulou1 on 07/05/2022 - 12:11
    +137

    How can he put a cap on interest rates? Is the government (i.e. taxpayers) funding the different between that and what the banks charge?
    The government has no control over the Reserve Bank, if the Reserve Bank was to lift interest rates, and there isn't a buffer in there for the Banks to make money they just won't offer the loans.

    • Clear on 07/05/2022 - 12:37
      -8

      The government has no control over the Reserve Bank,

      Tell that to /r/Australia 😂😂😂

        • Clear on 07/05/2022 - 14:14
          +44

          They're often a fair representation of OzBargainers.

        • Wiede on 08/05/2022 - 09:40
          +41

          Hey hey I am a redditor also. I might be dense, and I might be a communist.. but I am not.. wait what are we talking about again?

          • brendanm on 08/05/2022 - 16:17
            +2

            @[Deactivated]: They are the ones that scream bloody murder when price errors aren't honoured.

        • JPerez on 09/05/2022 - 12:45
          -4

          lol at all the triggered wannabe communists whos' brigading you

          • brendanm on 09/05/2022 - 14:05
            -2

            @JPerez: I'm loving it, will hopefully get some awards for "most divisive comment" or whatever it is in the monthly stats.

        • Clear on 10/05/2022 - 08:04

          Interesting how you get downvoted hard and I get upvotes. Being compared to members of /r/Australia is a really bad thing 😅😅

      • sackrace on 08/05/2022 - 18:32
        +9

        Maybe someone should tell scomo and the LNP seeing as they've been going around claiming they're responsible for low rates, right up until the rate rise oddly enough.

        • Clear on 08/05/2022 - 18:41

          You can do that 😉

    • orangetrain on 07/05/2022 - 12:42
      +18

      If you think ABC is any way biased towards political parties, then so is the RBA. They both have same independence with the government.

      FYI: Scott Morrison picked the head of RBA.

      • EightImmortals on 09/05/2022 - 08:47

        Insert Jonah Jameson laughing clip here.

        If you think all of these organisations aren't working towards the same goal, regardless of their real or imagined 'formal structures' then I have a lovely bridge to sell you. Get it quick before the rates go up again.

      • creamandpaper on 09/05/2022 - 17:12
        +1

        ABC relies on the gov for funding. Besides picking the RBA head, what else do they rely on the fed gov for? I'd say thats a pretty major difference. Of course there is also the fact that the job of RBA is far clearer than the ABC

        • DingoBilly on 10/05/2022 - 11:45
          +2

          So by this logic, ABC should be less biased than the RBA no?

          I would think being able to pick the person leading a company and setting its strategy would have a much bigger impact than relying on the government to provide your funding for you. It's especially odd given most people think the ABC is more left-leaning than right.. which would suggest they don't give a shit about who is in power?

          • creamandpaper on 10/05/2022 - 12:05

            @DingoBilly: The gov doesn't set the RBA strategy, they set the goals. And I think its a list of long-standing goals that haven't changed for a long time. I even learned about them in school (https://www.rba.gov.au/publications/annual-reports/rba/2014/…)

            If RBA thinks interest rates need to go up to keep inflation down, they will do so. I don't think the party in power has much influence after picking the head

        • abb on 10/05/2022 - 22:54
          +2

          ABC relies on the gov for funding. Besides picking the RBA head, what else do they rely on the fed gov for?

          Who funds the RBA?

          • rippa69 on 11/05/2022 - 01:25

            @abb: We do (not that we get any say in the matter).

      • donkeydoc on 10/05/2022 - 13:15
        +2

        ABC has been infiltrated by Scomo

    • CalmLemons on 08/05/2022 - 12:15
      +67

      Clive Palmer only wants to get votes and voted in. Once he is in, sure thing he'll screw all the little people and blame it on parliament not passing the bill.

      You cannot put a cap on interest rates, it's a guaranteed path to economic disaster. Interest rate decisions are not only dependent on the RBA but are also intricately intertwined with the global fs.

      • EightImmortals on 09/05/2022 - 08:51
        -8

        "Once he is in, sure thing he'll screw all the little people and blame it on parliament not passing the bill."

        I guess that possible. Of course we don't KNOW what will happen in that regard, we can only speculate at this stage.

        However if the majors get in then we KNOW FOR A FACT that's what will happen as it's all they've doing for the last 50 years or more.

        majorslast.com Make your own HTV card to take to the (s)election booth with you.

        "You cannot put a cap on interest rates, it's a guaranteed path to economic disaster. "

        And lowering them to almost zero has worked so well! We can tell they know what they're doing by the robust state of the global economy. lols :)

        • Antikythera on 09/05/2022 - 09:51
          +7

          majorsmiddle.com is a much better idea.

          if I'm not voting one of the centrist major parties because i don't like their lean why would I vote the extremist party further that side away from the middle?

          • EightImmortals on 09/05/2022 - 14:52
            +2

            @Antikythera: Because your 'extremist' (love the woke hyperbole) party will not be able to for government while the majors will, regardless of where placed on the voting paper (unless a miracle of Christ-like proportions occurs of course). The best we can hope for is to get enough minors and independents elected to break the balance of power and stop these nutjobs from trashing the place like they have been for decades. I has a dreamz!

        • WeeDeePotato on 10/05/2022 - 11:11
          +6

          There is a well documented history of him screwing over his workers. He owes them millions in wages. There is more than enough reason not to trust him in his policy claims.

          • EightImmortals on 10/05/2022 - 13:36
            -2

            @WeeDeePotato: As I said, that's completely possible. And if true makes him no better than the crooks currently in charge who have been screwing us over for decades. In other words if UAP gets enough candidates then things 'might' improve for us all. In the event of some miracle and they actually form government (they wont) then we'd be no worse of than what we already are.

            And remember if you keep voting the same way you always do then we're going to keep getting more of what we've always got and that's not cool.

          • Randolph Duke on 11/05/2022 - 12:05
            +3

            @WeeDeePotato: 100%

            He stiffed his own workers, why would anyone think he’s looking out for the general public.

      • RocketSwitch on 09/05/2022 - 10:09
        -3

        Like all the other muppets have done better? Guaranteed path to economic disaster? Like we're not there yet with the current BS government? The major parties are an absolute wreck, literally destroyed this country! And you think Palmer can do worse? I rather vote him in then see these idiots who don't know their own policies back in!

    • Donaldhump on 08/05/2022 - 12:35
      +50

      100% this cap from Palmer is dumb as shit. Just like his superannuation idea of limiting investment in aussie stocks only, all his ideas are crack.

      • greennick on 08/05/2022 - 13:50
        +8

        This one makes the least sense of all. It means we miss out on higher growth stocks overseas and in the event of any downturn in Australia, we are doubly stuffed.

        • Donaldhump on 08/05/2022 - 15:51
          +6

          Yep stupid af, but if someone really wanted to be 100% aussie they can do this on their in volition.

      • CalmLemons on 08/05/2022 - 22:28
        -1

        yep. There is a reason why none of the major investment firms have substantial offices in Australia.

        • bthaddad on 13/05/2022 - 09:07
          +1

          Plenty of the major investment firms have substantial offices in Australia.

    • macrocephalic on 09/05/2022 - 10:24
      +3

      In the US loans are generally not variable. If you take out a loan at x% then it stays at that percentage for the life of the loan or until you refinance.

      • BartholemewH on 09/05/2022 - 19:07

        Or until you send the keys back to the bank and let them deal with it.

      • greatlamp on 09/05/2022 - 20:47
        +1

        Yes, they pay higher rates upfront and the risk of rising rates is taken on by the lender, who then sells the risk as mortgaged backed securities to investors, pension funds and municipal governments.

        I am not sure if it's better or worse in the long run.

      • gromit on 09/05/2022 - 23:11

        That used to be true pre subprime. Now it is far rarer in the US and it is going towards variable or much shorter fixed terms.

  • rektrading on 07/05/2022 - 12:16
    +17

    The feds don't have the power to cap interest rates.

    They can control the cash rate but that is about it.

    • orangetrain on 07/05/2022 - 12:38
      -6

      Where have you been the past 2 years? The RBA massively cut and kept interest rates near zero right up until the election despite huge injection of money into the economy/hand outs to mate while saying rates will only rise years later. It's a ticking inflation bomb.

      Guess which party hand picked the RBA management?

      • rektrading on 07/05/2022 - 12:39
        +21

        The RBA massively cut and kept interest rates near zero

        Interest rates and the cash rate are not the same.

        • orangetrain on 07/05/2022 - 12:40
          -5

          True, but they're closely linked. Palmer could very well start a government bank offering 3% interest rates, no? Not that I think he has any intention.

          • ESEMCE on 07/05/2022 - 12:52
            +1

            @orangetrain: @orangetrain: They're somewhat linked but not closely.
            Try getting yourself a less than 3% percent mortgage even though the cash rate is well below that.

            • brendanm on 08/05/2022 - 16:25
              +3

              @ESEMCE: Less than 3% mortgage is very easy though?

          • legendary-noob on 10/05/2022 - 09:59

            @orangetrain: Let's call it what it is then. It's a subsidy. Funded by tax payers when market yields increase. Or benefit to tax payers if market yields fall.

            My bet - the former.

      • photonbuddy on 08/05/2022 - 11:07
        +1

        right up until the election

        You make it sound like this decision was political.

        Given the set of numbers that came out, it was just bad timing for the government. Given the set of numbers that were around in February/March, when no increase occurred, do you honestly believe that if an election was going on there would have been an increase?

  • DashCam AKA Rolts on 07/05/2022 - 12:17
    +6

    Back before the dollar was floated, the government did indeed cap interest rates on mortgages. Up until the mid eighties, and the cap was 12.5%pa. I bought my first place just after the cap was removed. My first mortgage was variable at 11.5%, later it topped 17.5% briefly. Was a helleva ride financially.

    • WreckTangle on 07/05/2022 - 12:47
      +34

      Bet that interest rate on a 45,000 home loan was a killer lol

      • DashCam AKA Rolts on 07/05/2022 - 13:09
        +7

        $72k price, as the market dropped due to deregulation of rate. Salary was in low $20ks pretax. When it hit 17.5% had to use Bankcard to pay living expenses & bills, for staggered repayment.

        • freefall101 on 07/05/2022 - 17:46
          +42

          To give you an idea of how bad it has gotten, in 1990 when rates were at 17% the average salary was $27k. To pay off an average mortgage at the time it took 44.5% of that salary. Definitely stressful times.

          Fast forward to 2022, we're now up to $69k (teehee) average salaries. But the average mortgage is over $600k and as of the last set of ABS data it takes 42% of salary to service a loan. And that was before the recent rate increase.

          We were basically already at the worst it was in the late 80's early 90's and there was quick respite (the rates dropped quickly through 1990). We're in for several years of little wage growth, interest increases an a whole lot of pain for this generation.

          • DashCam AKA Rolts on 07/05/2022 - 18:28
            +11

            @freefall101: Whole heartedly agree. A combination of a real estate hyper inflation, wage stagnation and inflationary trends are both frightening and unsustainable. My comment to @WreckTangle, was to clarify his throw away comment.
            During that period of high interest rate, some simply walked away from their homes, as high interest rates caused values to decline. Some owed more than their homes were worth, so they defaulted. A mate was looking to buy at that time, we viewed a few. Those homes were a few years old, in outer suburbs. The unfortunate mortgagees often still had a debt with the bank after the house sold.

          • macrocephalic on 09/05/2022 - 10:29
            +3

            @freefall101: The difference is that when you have a mortgage that's 4x your wage, and your interest rate is hight, you can scrimp and save and pay it off much faster. Because the effect of the compounding interest is so big, then any extra off the principal makes a big difference. When you have a low interest rate and a million dollar loan then scrimping and saving won't make nearly as much difference, because the effect of the compounding interest is much less.

            • filmer on 09/05/2022 - 16:04
              +3

              @macrocephalic: Basically buying at your absolute limits was just as hard to service in both eras.

              But if you were smart and allowed for a 10% buffer of total income. That 10% would have put a decent dent in your principal balance. These days it has little effect.

              Eg. 27k average income. Extra 3k per year on a 90k loan is 3% per year vs 7k extra on a 600k loan is 1%. Not to mention saving up 20% deposit. If you were lucky enough to live rent-free at home you could have previously saved for just a year or 2 and had the 20%. Now try saving for the 150k minimum you need for 20%.

              Now those who bought just before the rise to 17% would have had it absolutely terrible, but probably better than those who bought at current rates, who might be coming into potential 5% interest rates.

              • WeeDeePotato on 10/05/2022 - 11:19
                +1

                @filmer: @filmer Exactly. I've tried explaining this to my parents so many times and their response 'yes but we wanted to buy our house' i.e. they just couldn't wait because that was the house they wanted.

                I mean, yeah I wanted to buy a house in Toorak but I simply can't afford it so spent within my means. It's so frustrating that they don't understand they had a choice which is a privileged position compared to now. They are the 'I want it now' generation lol.

  • orangetrain on 07/05/2022 - 12:35
    +22

    There's huge amounts of empty houses, grass plots and even empty shops. I live in Sydney and see so many empty plots. Vacancy tax would solve this.

    Investors, even foreigners buy lots of properties/land and sits on it. Why not? Dealing with a PM takes time/money. So they sit on it, paying the bare minimum in council rates. That's it.

    Interest rates/negative gearing changes do NOTHING to those who have no mortgage. Yes, it may slow it down the buying/selling but if the aim is to get land/houses to be used, the vacancy tax is the way.

    Those businesses struggling with rent would pay less because so many CBD buildings or empty shops throughout Sydney just ask for massive rent and never rent it out. Vacancy tax would force them to seek tenants either by lowering rent or selling.

    Vacancy tax is the way.

    • Thaal Sinestro on 08/05/2022 - 13:15
      -8

      It would improve the situation a bit. Even better would be to allow homesteading on unused land :) Every Australian citizen should be entitled to a parcel of land. There is so much land in Australia but so little zoned for residential us. At the very least the percentage of land available for housing should be linked to the % of population growth, and backdated by 20 years. The rich people (middle/upper classes) want to restrict land availability in order to drive up the value of all of their investment properties. The Australian government only cares about the propertied classes. Liberal/Labour/Greens, doesn't matter, all part of the same Uniparty.

      • greennick on 08/05/2022 - 13:58
        +5

        LOL, so you just take land off people that own it and give it away?

        • EightImmortals on 09/05/2022 - 08:54
          +1

          Well it worked so well when Stalin and Mao did it!

        • AnophthalmiaCervidae on 09/05/2022 - 09:15
          +1

          The British colonists in Australia

      • redfox1200 on 08/05/2022 - 18:57
        +7

        You are entitled to land, all you have to do is buy some and it's yours

    • greennick on 08/05/2022 - 13:58
      +1

      We should be dumping stamp duty and increasing property taxes, that will act as a vacancy tax, particularly if we limit deductions for property to being on an asset by asset basis (ie, can only offset costs against the income of that property - killing negative gearing).

      Vacancy tax is easily manipulated and just results in short term rentals to beat the tax, which is not good for business. There is a reason vacancy taxes are largely considered political instead of effective.

  • nedski on 07/05/2022 - 12:38
    +81

    Palmer is an idiot but a smart idiot. He has put out this policy that appeals to people but has NO WAY IN HELL of being implemented. If you vote for Palmer, you will be nothing but disappointed.

    • plmko on 07/05/2022 - 14:11
      +33

      A smart idiot is just a synonym for a fraudster.

      • Bullion78 on 08/05/2022 - 10:19
        -8

        Which party are you voting for? I will LOL if you say one of the major parties after that comment.

        • Shoshneaky on 09/05/2022 - 10:46
          +1

          Genuinely curious: which policies/evidence on each major party are you critical of? Would appreciate if you could provide a source for me to read into as well.

      • drfuzzy on 08/05/2022 - 16:33

        There are smart idiots who don't commit fraud, like Trump…..oh wait….

    • dufflover on 07/05/2022 - 16:45
      +5

      The party is infamous for the whole FREEDOM stance but I've noticed he's smartened up to that too. All the adds on TV are things like interest rates, super, and debt. Steering away from that really polarising stuff like climate and COVID, even if it is still their policy stance.

      I can see that fooling a fair share amount of people not into basic news or politics to "give his party a go".

      • Bullion78 on 08/05/2022 - 10:25
        -1

        The 2 party duopoly has been fooling the public for time immemorial presenting the notion to the public than any other vote but LIB/ALP is a wasted vote.. The UAP is not getting my vote but they they will most certainly be prioritised above the 2 headed beast, who'll be last and 2nd to last.

        • CandyMan on 08/05/2022 - 15:19
          +2

          There is less and less difference between the two major parties. Slowly they are becoming like a dictatorship where a group of individuals collaborate for a shared set of goals. You just get a different face, same crap.

          Unfortunately there are no other reliable parties to fill the void and take over.

          • EightImmortals on 10/05/2022 - 06:49
            +5

            @CandyMan: Doesn't matter. You do know that 'parties' were not even a thing constitutionally speaking. Government was supposed to be made up of individuals representing their local area and passing legislation based on it's merits rather than pushing personal agendas which is what we have had for decades now.

            So given that the population is programmed to only vote for the tweedledumb/tweedledumber show (see Larkin Rose's 'Jones Plantation for a good explanation) then it can be assumed that either one or the other will be 'elected' (of course the losers get to keep their jobs as well, they just swap chairs, but that's a different topic). So if it's the case that we will be lumbered with the devil we know, what can we do to minimise the amount of damage they do? The only thing I can think of is to PUT THE MAJORS LAST, it might not stop them getting back into power but if we get enough independents/minor parties in as well, by breaking the balance of power it might help us all going forward.

          • mavis30551 on 11/05/2022 - 11:08
            +2

            @CandyMan: How can you honestly think that?
            The ALP have lost the last 3 elections with controversial policies that are so different from the Libs.

            Last election it was a slight reduction to negative gearing and they were lampooned in the media for it.
            The carbon tax in 2012-14 is a far different policy from the libs who abolished it
            LIbs Stance and policies on climate change (non existent) cuts to NDIS and implimentation of robo debt - all so so different - you dont really pay attention if you think theyre the same party's.

            Saying they are the same party is really showing how completely brainwashed by MSM you are.
            This is the exact formula Murdoch and fair fax use to get you to vote for the same tired Coalition or UAP mob.
            You think , the government is doing a terrible job ( they are) - MSM screams "theyre all the same" (They are definitely not).

            • CandyMan on 13/05/2022 - 14:03
              -1

              @mavis30551: Ok
              Just think Abbott as opposition leader and Albanase as opposition leader.
              There is no opposition, just a long wait to switch seats

    • yippy on 07/05/2022 - 19:53
      +25

      Palmer doesn't care about anyone but himself. He'll say anything to get elected.

      • drfuzzy on 08/05/2022 - 16:34
        +1

        I see a trend in politics of politicians doing this. Every. Single. Election.

      • tonsta on 09/05/2022 - 08:35
        +12

        Trump lite… but heavy

      • Aweios on 09/05/2022 - 13:28
        +2

        If anyone wants proof of this, take a look at his mining tax policy. He's the one that got rid of it in 2013 yet he wants it back as a "budget balancer". He doesn't really believe in it.

    • EightImmortals on 09/05/2022 - 08:55

      Probably, but if this is the ONLY reason you are voting for Palmer then you shouldn't be disappointed at all.

  • GoldenDragon888 on 07/05/2022 - 12:38
    +45

    I wish I was laissez-faire about people not spelling this phrase correctly.

    • bdl on 07/05/2022 - 13:05
      +3

      Just be lazy - fair enough way to be

    • Joshman5k on 08/05/2022 - 10:47
      +9

      It's a doggy doggy world after all!

      • Gravy on 08/05/2022 - 20:06
        +1

        I could care less :)

    • Mallard on 09/05/2022 - 14:01
      +3

      r/boneappletea

    • BartholemewH on 09/05/2022 - 19:20
      +1

      What is the problem with the spelling, pacifically?

    • iDroid on 10/05/2022 - 22:32
      -1

      Eh.

  • AndyC1 on 07/05/2022 - 12:40
    +4

    Not going to happen.

  • SF3 on 07/05/2022 - 12:54
    +1

    Correlation does not imply causation.

    • CandyMan on 08/05/2022 - 15:19

      What!

    • CaptainMaverick on 09/05/2022 - 13:57

      People do the implying. Correlation doesn't 'imply' anything because it can't, anymore than correlation can eat a sandwich.

  • Ocker on 07/05/2022 - 14:12
    +10

    The only way Palmer could cap the interest rate would be by the government subsiding the cost over 3% pa
    According to my calcs., for every 1% he subsidised owner occupied home loan rates it would cost the government (taxpayers) about $14 billion per annum

    • orangetrain on 07/05/2022 - 14:34
      +2

      Or start a Commonwealth bank with 3% loans. Bet big 4 would cry.

      • Settero on 07/05/2022 - 14:44
        +3

        So would the taxpayers if 3% was below running costs and we are left with the bill , and you know how great the government is with taxpayer money funded projects.

      • gromit on 08/05/2022 - 20:32
        +2

        Everyone should cry, Be buggered if I want the government subsidising loans in such a moronic fashion with taxpayer money.

        • EightImmortals on 09/05/2022 - 08:57
          +1

          What about labors 'hey-we'll-buy-40%-of-your-mortgage' dealy?
          Has anyone run the numbers on that one?

          (Not to mention the overtones of 'by 2030 you will own nothing')

          • Antikythera on 09/05/2022 - 09:59
            +3

            @EightImmortals: i believe the similar system run in W.A. for the last thirty years has turned a profit for the government.

            i'm keen to know if the government also pays for 40% of renovations.

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