Get over it! Borrowers have nothing to bleat about

Don’t waste tears on someone facing a leap interest payments from $30,000 to $50,000 a year when they’ve seen the value of their property go from $1.5m to $2.5m.

Earth to home loan borrowers.

You had up to three years of effectively ‘free money’. Get over it.

Only now are you being asked to pay something akin to a normal interest rate. Tough. I do not think.

Everybody likes a free lunch; borrowers these last few years have had a free banquet.

Further, the period of zero official rates and 2-3 per cent mortgage rates enabled quite literally tens of thousands to get their crucial first step on the property-owning ladder.

It’s a step they would not otherwise have been able to take. OK, they are now feeling pain; but would they sincerely prefer never to have bought that property? To still be a renter? Chasing somewhere to live? Facing those soaring rentals?

And then, maybe, trying now to borrow enough money to buy that first home, at today’s interest rates, in today’s property market?

Would you really prefer to be heading off to an auction this or next weekend?

If you are going to cry for anyone, think of bank depositors, who paid and paid big time for the borrower free lunch.

They got zip, zero, nada, nothing in interest on their deposits. Now at last they are getting some sort of still pretty miserable interest.

And for the eternally mathematically-challenged media, there are as many depositors as there are borrowers out there; there are as many billions of dollars in bank deposits as there are in bank home loans.

Borrowers have had up to three years of effectively ‘free money’.

The crucial point that gets lost in the media hysteria over rising rates is that it wasn’t only first-home buyers that got the ‘free money’.

It was also the vastly greater number of all home loan borrowers, who all got the (non-gender specific) mother-of-all Christmas presents from Reserve Bank governor, Philip Lowe.

Think about the – hundreds of thousands – of borrowers, who were paying, to take a typical example, say, $2000-a-month in loan repayments through 2019, and then got to pay only, say, $1000-a-month for three years.

Gee, they’ve been badly done by, now rates have gone back up.

Further, the great bulk of those who got the free lunch of free money for three years had already cashed in a huge tax-free capital gain on one property and traded up to a new one.

Or had the value of their existing property soar.

Plus all those owning investment properties.

They are all crying all the way to the bank.

On the huge, humungous, plus side for these ‘other’- other than first-home buyers – borrowers, was the massive, and mostly tax-free, capital appreciation in the value of their property or properties, thanks to those zero rates and free money for borrowers.

I’m not crying too many tears for someone facing a leap in their interest payments from, say, $30,000 to $50,000 a year, who has seen the value of their property go from, say, $1.5m to $2.5m.

A final thought, for those bleating about Governor Lowe ‘breaking his promise’ not to hike before 2024.

Would they really, really, prefer he’d kept it; and announced instead that he was going to hike the official rate to 5 per cent, in one go, next January 1?