Reserve Bank of Australia Governor Philip Lowe steps outside Sydney house ahead of February meeting
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The Reserve Bank governor appeared relaxed as he emerged from his luxury Sydney home and prepared to raise interest rates for the ninth straight month.
Philip Lowe, married with three children, lives in the wealthy eastern suburb of Randwick, where the median home price is $2.9 million. His house with a park-like yard would be worth considerably more, likely worth more than $4 million.
The 61-year-old economist with a PhD owns a house with a stone and wrought-iron fence lined with clivias that is just a short walk from Coogee Beach.
With a total compensation package of $1,037,709 and a base salary of $890,252, Dr. Lowe is shielded from the worst cost-of-living crisis in more than three decades.
He was seen getting into a Volvo XC40 SUV, even the most basic model starting at $53,000.
He was photographed with a copy of The Australian Financial Review on Tuesday morning in his gentrifying neighbourhood.
The Reserve Bank governor had a grim expression on his face as he stepped out of his luxurious Sydney home and prepared to raise interest rates for the ninth straight month.
He was seen getting into a Volvo XC60 SUV, even the most basic model starting at $73,000
His wife now works at the Australian Prudential Regulation Authority, which sets the rules on bank lending as rates continue to rise.
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.
This would take the cash rate to a new 10-year high of 3.35 percent, up from the current 3.1 percent.
But the Commonwealth Bank, Australia’s biggest home lender, is warning borrowers to expect a potential 0.4 percentage point rise that would bring the cash rate to 3.5 percent.
Inflation is at its worst level in 32 years and there are fears that this rate hike is far from the last.
Australians with an average mortgage of $600,000 would have seen their payments increase by $12,000 over a year, even with just a further quarter of a percentage point rate increase on Tuesday.
Since May, the RBA has raised interest rates eight times, with the 300 basis point increases in 2022 marking the most severe monetary policy tightening since a target cash rate was first published in 1990.
Philip Lowe, a father of three, lives in the wealthy southeast suburb of Randwick, where the median home price is $2.9 million.
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.
That’s based on a Commonwealth Bank variable rate, for a borrower with a 20 percent deposit, rising to 5.22 percent in February from 2.29 percent in May 2022 before the rate increases. within 30 years.
Canstar finance expert Steve Mickenbecker said rising mortgage rates were causing the biggest pain in the family budget.
He was seen getting into a Volvo XC40 SUV, even the most basic model starting at $53,000.
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.
The futures market expects the 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.