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The Greens have sensationally called for the Treasurer to take unprecedented action and reverse a record interest rate hike for the ninth straight time and fire the head of the Reserve Bank.
The RBA cash rate has risen another 0.25 percentage point to a new 10-year high of 3.35 percent, up from 3.1 percent, adding $93 per month to payments on an average $600,000 mortgage.
The move will bring more pain to Australian mortgage holders, as the minority party calls on Treasurer Jim Chalmers to sack RBA Governor Philip Lowe, 61, who earns $1 million a year.
Sen. Nick McKim, who holds the party’s treasury portfolio, made the call, an extraordinary act that would jeopardize the independence of the Reserve Bank, formalized in 1996.
Under the RBA Act, the Treasurer would technically be allowed to intervene against Dr. Lowe’s decision. However, it could lead to a confrontation between the bank and the Treasurer of Parliament and lead to mass resignations on the RBA board.
The Reserve Bank governor left his luxurious Sydney home for a board meeting where interest rates were expected to rise for the ninth consecutive month.
Greens Senator Mehreen Faruqi and Greens leader Adam Bandt. The Greens have called for the head of the Reserve Bank to be fired
Australian home borrowers have been crushed with a ninth consecutive interest rate hike with the Reserve Bank raising the cash rate to a new 10-year high of 3.35 percent.
“First, (Treasurer Jim Chalmers) needs to ask Philip Lowe to resign,” Sen. McKim said in a statement.
‘Secondly, he needs to use the powers he has to reverse today’s RBA decision. The RBA is failing in its duty to ensure the economic prosperity and well-being of the people of Australia.
“The RBA is willing to drive Australia into a recession in pursuit of a policy that only benefits the already rich.”
The latest increase means that a borrower with an average mortgage of $600,000 has now seen their annual payments increase by $12,000 since May 2022.
The latest rate increase will see your monthly payments increase another $93 to $3,303, up from $3,210.
A couple working on a $1 million mortgage will see their payments skyrocket another $154 per month to $5,504, up from $5,350.
That’s based on a Commonwealth Bank variable rate that rose to 5.22 percent in February, up from 4.97 percent for a borrower with a 20 percent mortgage deposit paying off a loan over 30 years.
Lowe warned Tuesday afternoon of more rate hikes in 2023, even though borrowers are already enduring the steepest rate hikes since a target cash rate was first published in 1990.
“The board expects that further interest rate increases will be needed in the coming months to ensure that inflation returns to target and that this period of high inflation is only temporary,” Dr. Lowe said.
“The board remains resolute in its determination to bring inflation back on target and will do whatever it takes to achieve it.”
Earlier, Dr. Lowe appeared relaxed as he left his luxurious Sydney home. He predicted in 2021 that interest rates would stay at record lows until 2024.
Before the crucial meeting, Dr. Lowe was seen leaving his Randwick home in the city’s east, where the median home price is $2.9 million. Just steps from Coogee Beach, the property with its park-like garden and wrought-iron fence would conservatively be worth at least $4 million.
The married father of three was photographed with a copy of The Australian Financial Review before setting off in his latest model Volvo XC40.
Unlike millions of other borrowers, the powerful banker, who has a total compensation package of $1,037,709 and a base salary of $890,252, is largely shielded from the worst cost-of-living crisis in more than three decades.
His wife now works at the Australian Prudential Regulation Authority, which sets the rules on bank lending as rates continue to rise.
Inflation is at its worst level in 32 years and the Reserve Bank said on Tuesday that further tightening of monetary policy would take time.
“However, it will take some time before inflation returns to target rates,” Dr. Lowe said.
The RBA’s 325 basis point increases since May of last year are the most severe since a target cash rate was first published in January 1990.
Senator Nick McKim, who holds the Greens’ treasury portfolio, made the call, an extraordinary act that would jeopardize the independence of the RBA, formalized in 1996.
Philip Lowe was seen getting into a Volvo XC40 SUV, even the most basic model starting at $53,000
The Dr. Lowe Reserve Bank board is widely expected to raise the cash rate on Tuesday afternoon for the ninth straight month, with January being the only month they don’t meet.
Philip Lowe, a father of three, lives in the wealthy southeast suburb of Randwick, where the median home price is $2.9 million.
Dr. Lowe apologized to homeowners who applied for home loans based on his forecast that rates would not increase for several years.
“I am certainly sorry if people listened to what we said and acted on what we said and are now sorry for what they did,” he told a parliamentary committee in November.
“That’s unfortunate and I’m sorry it happened.”
The end of the record 0.1% cash rate means that borrowers with an average mortgage of $600,000 would have seen their monthly payments this month rise to $3,303, $997 up from $2,306 in early May.
Even if rates didn’t increase any further after February, this borrower’s annual payments would be $11,964 higher than they were before the rate increase.
A couple with a $1 million mortgage would have seen their monthly payments increase by $1,661, from $3,843 to $5,504, which works out to $19,932 for one year.
Canstar finance expert Steve Mickenbecker said rising mortgage rates were causing the biggest pain in the family budget.
His home with a park-like yard would be worth considerably more, likely worth more than $4 million.
Dr. Lowe, who has a total compensation package of $1,037,709 and a base salary of $890,252, is shielded from the cost-of-living crisis
“There is no line in the family budget that hurts borrowers more than the home loan,” he said.
Inflation in the year to December rose to 7.8 percent, a level well above the Reserve Bank’s 2-3 percent target.
But bread and cereal prices last year rose 12.2 percent compared with 13.2 percent for gasoline and a whopping 26.6 percent for mortgage interest rates, inflation figures showed. and cost of living from the Australian Bureau of Statistics.
The futures market expects the RBA cash rate to peak at 3.7 percent in July, a level well below Westpac and ANZ forecasts for a 3.85 percent cash rate.
AMP Capital chief economist Shane Oliver said raising rates as high as 4.1 percent, as the futures market had recently predicted, would trigger a severe recession.
“We are close to the cap on rates and taking the cash rate to 4.1 percent or higher would be a policy mistake that would risk a major recession,” he said.
The RBA review is due to be reported to the government in March 2023.