During the 1990's I worked at Centrelink and saw the devastation high interest rates caused families. It looks like we are in for a repeat:
MORTGAGE rates are predicted to hit a horror 10 per cent within the next two years as the Reserve Bank hikes rates to prevent runaway inflation.
Leading economists say soaring commodity prices and rapidly rising employment are stoking dangerous inflationary pressures that the RBA is determined to stamp out.
As a result, economists at Macquarie Bank and Commsec, the Commonwealth Bank's investment arm, have both forecast the cash rate will hit "pre-crisis highs" of 7.25 per cent by 2012 if the economy continues to perform so strongly.
Since banks have expanded their profit margins during the financial crisis, that translates to variable mortgage rates of 10.1 per cent - the highest since 1996.
The worst hit are going to be families who were on modest incomes but took advantage of the Rudd government's home grants. Also maybe if the government hadn't been handling money out as if it were candy inflation wouldn't be such a problem.