Ever wondered why we’re complaining more and more about interest rate rises? It’s because we’re so heavily in debt we feel even the slightest move in interest rates. How did we get to this? Well, economist Steve Keen, Associate Professor at the University of Western Sydney, argues that it’s because the banks have made it too easy to borrow money. That’s pushed up house prices and left us reeling every time the Reserve Bank of Australia increases rates.
This week’s interest rate rise, despite a series of flat indicators, came as a complete surprise to many. The inevitable decision by the Commonwealth Bank to almost double the rate of increase has angered many, with calls for increased competition in the sector.
In today’s BTalk Steve Keen suggests that more banks offering loans won’t fix the problem, it’ll only encourage more debt and a “plunge to the bottom in lending standards”.
So we’re all angry with the banks for taking advantage of loans — but we don’t need more of them.