BECAUSE of a half per cent increase in interest rates a low-income earner needs to pay an extra $20 per month in mortgage payments on their $100,000 loan.
This will reduce their spending money by $20 per month, which when you consider there are millions of people paying off mortgages, should slow the economy.
The $20 extra per month paid on the mortgage is then distributed to the banks’ wealthy investors either as increased interest payments on savings or increased dividends to shareholders.
As these people are generally well off or foreign investors (with the exception of self-funded retirees) and don’t really need the money, they don’t spend it, it simply increases their wealth.
In essence, the Government and Reserve Bank’s solution to slowing the economy is to take $20 per month off the poor and give this money to the wealthy or foreign investors.
Surely there is a better way.
Perhaps they could devise a plan where instead of increasing interest rates, simply introduce a compulsory $20 increase in mortgage payments, where at least the increase will then be paid off the mortgage.
The effects will be the same and probably better as the wealthy will also have less money to spend and the poor will be able to pay off their mortgages quicker.
Simple Simon,
Beechboro
