Reserve Bank Governor Philip Lowe paid his mortgage with work perk
Reserve Bank Governor Philip Lowe paid off the mortgage on his childhood home at half the interest Australians paid every day, thanks to a generous work bonus.
Dr. Lowe, who raised the cash rate to 3.6 percent for the 10th consecutive month on Tuesday, bought his house in Randwick, in eastern Sydney, in April 1997 for $1,075,000.
The five-bedroom home would have cost just under $2 million after inflation today, and comparable homes in the area are now valued at more than $4 million.
He paid for the house in part with a $241,000 loan from the RBA that was fixed at half the Commonwealth Bank’s standard floating rate, the central bank confirmed to Daily Mail Australia.
Another $151,000 was borrowed directly from CBA, presumably at no discount, and the remainder in cash.
Reserve Bank Governor Philip Lowe outside his home in Randwick, eastern Sydney, with his daughter. He bought it in 1997 using a loan from the RBA at half interest
Dr. Lowe sold his previous home in Bondi Junction for $481,000 in June 1997, and his wife Jocelyn Parker sold hers in Paddington for $430,000 in September 1996.
The couple could probably afford such a small down payment relative to the cost of the home due to the sale of their old properties.
The RBA said both loans from Dr. Lowe had been paid off “several years ago” and that he and his wife were mortgage-free.
Dr. Lowe received $890,252 in base salary in fiscal year 2022, plus $8,870 in various benefits and allowances and $115,171 in retirement.
The RBA Officers’ Home Advances Scheme ran until 2001 and in 2003 another quarter of the staff reaped the benefits. Only 11 are still employed by the RBA today.
Dr. Lowe and Mrs. Parker met in the early 1990s when they both worked at the RBA and now have three children.
Ms Parker is now a lead analyst in data analytics with the Australian Prudential Regulation Authority.
Dr. Lowe raised the cash rate to 3.6 percent for the 10th straight month on Tuesday
They both receive free access to the Qantas Chairman’s Lounge and Dr. Lowe free access to Virgin Australia lounges and National Press Club membership.
He has received free tickets to various dinners and balls such as the Lowy Lecture, BCA, AFR and Westpac charity fundraiser.
Qantas gave him a bottle of 2022 Piper-heidsieck Rare Millesime Champagne in 2019 which he donated to the Reserve Bank Benevolent Fund.
The couple has no investment property, but Ms. Parker has an estate trust and Dr. Lowe has some Telstra stock and exchange-traded funds.
Ms. Parker holds Telstra and CSR shares, and their children own Telstra shares, ETFs and “very small interests in select ASX-listed companies.”
They both have credit cards (Dr. Lowe with CBA, Ms. Parker with NAB) and Vanguard, Colonial First State managed funds.
The pension for both is with Sunsuper, and what little their children have so far is with BT Super.
Dr. Lowe (pictured at Bonnie Doon Golf Club in Pagewood in southeastern Sydney) played so much golf during Covid lockdowns that his handicap dropped from his low 20s to mid-teens
Dr Lowe grew up in Wagga Wagga, NSW Riverina, the eldest of five children, his mother a primary school teacher and his father a small business owner.
He attended local schools St Michael’s Regional High School and Trinity Catholic College where he was the dux of both.
His enthusiastic economics teacher, Mrs. King, piqued his interest in banking and he decided to pursue his career in mid-year 12.
Dr Lowe’s parents could not afford to send him to university so, with the help of Mrs King, he applied for an RBA scholarship to the University of NSW where he took evening classes while at 17 years old age did administrative work for the RBA.
He did so well on his freshman exams that the bank told him to study full-time, and he graduated cum laude and the University Medal in 1985.
After working full-time at the bank after that, the RBA sent him to MIT in 1987-91, where he received his PhD in economics.
Dr. Lowe eventually rose to be deputy governor in 2012, making about $700,000 a year until he was named governor in 2016.
After two near-death experiences in 2016, he swims 1-2 km at least three times a week, goes cycling and plays golf with his son on weekends.
He played so much golf during the Covid lockdowns that his handicap dropped from his mid-twenties to mid-teens.
Dr. Lowe told a breakfast Wednesday morning that this month’s 10th consecutive hike could be one of the last, a day after rates were raised to their highest level in 11 years, up 0.25 percentage points from 3.35 percent. .
Variable-rate borrowers saw their monthly repayments increase by 46 percent in just 10 months.
The big banks still expect more rate hikes in April and May that are likely to negatively impact borrowers who have only recently taken out a loan, when the RBA money rate was still 0.1 percent.
“We also discussed that with monetary policy now in a restrictive area, we are closer to the point where it is appropriate to pause rate hikes to allow more time to assess the state of the economy,” said Dr. Lowe at the AFR Business Summit. 2023 in Sydney.
“We estimate that the more recent rate hikes have pushed monetary policy into restrictive territory, which was necessary to ensure that the current period of high inflation is only temporary.”
Dr. Lowe stuck to his claim that higher inflation would lead to higher interest rates with “people losing jobs and more pain.”
Dr. Lowe’s seven-year term as RBA governor expires on Sept. 17, and Treasurer Jim Chalmers is awaiting the report of an independent central bank review before deciding whether to extend it.