PM hoping prices rise
TONY Abbott wants house prices to continue rising, putting him at odds with Treasury Secretary John Fraser, who says Sydney and Melbourne are in the grip of a bubble.
“When you look at the housing price bubble evidence, it’s unequivocally the case in Sydney,” Mr Fraser said.
But the Prime Minister told parliament he hoped the market would continue to rise.
“I want housing to be affordable, but I also want house prices to be modestly increasing,” Mr Abbott said.
His comments came under attack, with Opposition leader Bill Shorten saying Mr Abbott was out of touch.
THE Reserve Bank says it will back any probe into the recordgap between the cash rate and credit card interest rates, admitting the widening margin was “hard to explain”.
And while acknowledging the mounting level of credit card debt was “significant” for the individuals affected, the central bank said the sum was too small to pose a risk to the nation’s financial stability.
RBA assistant governor, Malcolm Edey, told a Senate estimates hearing the high rates could be due to banks deeming such lending as riskier than mortgages, exacerbated by their sensitivity to risk in the post-financial crisis environment.
“I’m not here to defend the banks ... to me the gap seems high and it’s hard to explain why it’s as high as it is,” Dr Edey said.
“The amount of credit card debt in Australia is much smaller than is the case for mortgages and business loans.
“Credit card debt is significant for people paying it but it’s just not that big for the economy.”
Australia’s credit card debt sits at about $48 billion, with some $33 billion of that accruing interest. And although the cash rate has dropped by 2.75 percentage points since 2011 to a record low of 2 per cent, the average standard credit card purchase rate during that time has remained virtually static at 19.75 per cent, comparison website finder.com has found.
The highest purchase rate is a whopping 25.9 per cent, it found, although card operators are increasingly offering interest-free periods of up to 24 months to entice cardholders to switch.
Dr Edey said credit card rates had proven “stickier” than the standard variable home loan rate, meaning card operators were not as likely to pass on the full benefits of a cut to the cash rate.
He said there was merit for a probe into the reasons for the rate gap by, or in concert with the banking regulator, the Australian Prudential Regulation Authority. “We don’t have an interest rate regulator (but) somebody should look at it (the gap), we should consult with other regulatory agencies on the matter.”
Earlier, Treasury secretary John Fraser said the people typically paying higher credit card rates tended to be those who were less capable than others of servicing that debt “and that worries me”.