"There was one lesson from the [global financial] crisis I didn't talk about two years ago that is relevant to today: be careful of removing the stimulus too early," Mr Debelle said at the Australian Business Economists webinar today.
"A number of European countries learned this lesson to their cost after the global financial crisis.
"Absent the fiscal support, the Australian economy would be much weaker with the consequent economic and social damage."
Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
6.04% p.a. | 6.06% p.a. | $2,408 | Principal & Interest | Variable | $0 | $530 | 70% | Featured Online ExclusiveUp To $4K Cashback |
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5.99% p.a. | 5.90% p.a. | $2,396 | Principal & Interest | Variable | $0 | $0 | 80% | Featured Apply In Minutes |
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5.99% p.a. | 6.51% p.a. | $2,589 | Principal & Interest | Variable | $0 | $530 | 90% |
Mr Debelle's comments come after the Reserve Bank found that unemployment numbers would have doubled without JobKeeper.
Currently, both JobKeeper and the boosted JobSeeker rate are set to end in late March 2021.
Despite the cost of stimulus to the government budget, Mr Debelle said "public debt is very manageable", with public sector debt remaining low as a share of gross domestic product (GDP).
Private debt, however, remains some of the highest in the world, with household debt at 119% of GDP, second in the world only to Switzerland.
The 119% figure was measured in March 2020, and Mr Debelle said in that time household savings have skyrocketed.
"Household incomes have been boosted by the support through the JobSeeker and JobKeeper programs," he said.
"These have all contributed to a very large increase in household savings, further bolstered by the constraints on household spending through the period."
Earlier in the year, Australian Bureau of Statistics (ABS) data revealed household savings ratios were at a 46-year high, and AMP also found household incomes were better off by $5,000, on average, during the pandemic.
Where to for older people?
Mr Debelle said lower mortgage rates have led to a 5% owner-occupier credit growth, but that had not carried over to the investment space.
"Investor lending had been declining, in part reflecting expectations of lower returns given weaker rental demand," he said.
Throughout the pandemic, many states made it illegal for landlords to evict tenants who could not pay rent.
Mr Debelle also said lower borrowing rates tend to benefit younger people.
"Those who depend on interest income are generally aged over 65," he said.
"Back when the cash rate was at 1.5%, around 5% of these older households were earning more than one-fifth of their income from interest."
Deeming rates have so far not been reduced after the Reserve Bank's cash rate cut to 0.10% earlier in November.
The rates, which the government 'deems' pensioners' assets to be earning, are still at 0.25% on the lower threshold, and 2.25% at the higher threshold.
The highest savings account rates are generally under 2% per annum, as seen in the table below.
| Bank | Savings Account | Base Interest Rate | Max Interest Rate | Total Interest Earned | Introductory Term | Minimum Amount | Maximum Amount | Linked Account Required | Minimum Monthly Deposit | Minimum Opening Deposit | Account Keeping Fee | ATM Access | Joint Application | Tags | Features | Link | Compare |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
4.40% p.a. | 5.75% p.a. Intro rate for 4 months then 4.40% p.a. | $980 | 4 months | $0 | $250,000 | $0 | $0 | $0 | Featured |
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0.55% p.a. Bonus rate of 4.95% Conditions apply. | 5.50% p.a. | $1,128 | – | $0 | $100,000 | $1,000 | $0 | $0 | |||||||||
1.20% p.a. Bonus rate of 4.20% Conditions apply. | 5.40% p.a. | $1,107 | – | $0 | $250,000 | $1,000 | $0 | $0 | Featured |
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4.75% p.a. | 5.35% p.a. Intro rate for 4 months then 4.75% p.a. | $1,001 | 4 months | $0 | $249,999 | $0 | $0 | $0 |
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0.50% p.a. Bonus rate of 4.85% Conditions apply. | 5.35% p.a. | $1,097 | – | $1 | $50,000 | $500 | $1 | $0 |
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0.10% p.a. Bonus rate of 5.00% Conditions apply. | 5.10% p.a. | $1,044 | – | $0 | $250,000 | $200 | $0 | $0 | No monthly fees |
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0.05% p.a. Bonus rate of 4.95% Conditions apply. | 5.00% p.a. | $1,023 | – | $1 | $250,000 | $20 | $0 | $0 |
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0.05% p.a. Bonus rate of 5.45% Conditions apply. | 5.50% p.a. | $1,128 | – | $0 | $50,000 | $1,000 | $0 | $0 | For customers aged 14-35 years | ||||||||
0.05% p.a. Bonus rate of 5.30% Conditions apply. | 5.35% p.a. | $1,097 | – | $0 | $250,000 | $1,000 | $0 | $0 |
Ready, Set, Buy!
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Brooke Cooper
Emma Duffy
