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Mortgage interest burden hits new record high.



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WAYNE SWAN MP Federal Labor Shadow Treasurer

MORTGAGE INTEREST BURDEN HITS NEW RECORD HIGH

New figures released by the Reserve Bank show how hard households have been hit by four interest rate rises since John Howard said he would keep interest rates at record lows.

According to official RBA data, households are paying a new record high proportion of disposable income in mortgage interest repayments.

Australian households are now spending a record 9.3 percent of their disposable income simply paying off the interest on their mortgage.

This measure has increased by 76 percent since interest rates started rising in May 2002 and is 53 per cent more than the peak in September 1989 under Mr Keating.

After eight rate rises on their watch, John Howard and Peter Costello still refuse to face up to the new interest rate reality: high household debt levels mean each interest rate rise packs a far bigger punch than ever before.

Mortgage Interest Repayments Reach Record High

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

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2000

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2002

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2005

2006

2007

Year

Debt servicing ratio (%)

1990 - interest rates peak under Mr Keating

2002 - interest rates start rising

Source: Reserve Bank of Australia (Ratio for housing debt to Dec. 2006)

Contact: Matthew Coghlan 0415 098050 www.SwanMP.org

[16 March 2007]