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Why some people are quietly cheering higher interest rates
The number of people approaching and in retirement, who live on the income generated from their savings, are almost as sizable as the home owners paying mortgages in this country right now.
Every Sunday I write a column that is published in the money section of The Age, The Sydney Morning Herald, Brisbane Times and WA Today. And our community asked that I send it out the day it goes to print. So, this week’s column can be read in full here.
Interest rates hit a 12-year high this week with RBA governor Michelle Bullock announcing our 13th consecutive rate rise since we hit all-time lows of 0.1 per cent in November 2020.
The cash rate now sits at 4.35 per cent, and while many mortgage-holders are feeling the pinch and the media are screaming about the agony, there’s a huge population in Australia that is quietly rejoicing in the higher interest rate environment. And it’s time we talked about them a little more.
The number of people approaching and in retirement, who live on the income generated from their savings, are almost as sizable as the home owners paying mortgages in this country right now. And they have the power to cause some significant abnormal shifts to economic patterns.
Thirty-five per cent of Australian homes are owned with a mortgage, according to the most recent census. And 31 per cent of homes are owned outright without a mortgage, many of these owned by people over the age of 50.
For people who own their own homes outright, and have then diligently saved and built up a comfortable cash reserve, rising interest rates are usually good news. Those people, if they have any money invested in cash, have enjoyed a 1.5 per cent pay rise over the twelve months and quite possibly, a positive bump to their consumer confidence.
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