Reserve Bank Governor Philip Lowe fronted the Federal Senate Select Committee on COVID-19, saying ensuring Aussies got their jobs back was his main focus right now, which would take care of future mortgage repayments.
Mr Lowe, who fronted the Committee virtually from his office on Thursday, was told by Senator Jacqui Lambie that she was “terribly concerned” that people didn’t know what was going to happen in September – when JobKeeper payments were set to peter out – and asked if he was similarly concerned.
“What I am focused (on) is people geting jobs and income again,” Mr Lowe responded. “If people have got their jobs back and their income back then they will be able to pay their mortgages back.”
“So the fact that people have a bit more interest to pay over the term of their loan which could be another 15 years or something which would be spread out, that’s entirely manageable if you’ve got a job and if you’ve got your income… my focus is making sure that people have got their jobs and income.”
Mr Lowe told the committee that “the econmy is doing a bit better than was earlier feared”.
But he added that while the better than expected result did not affect RBA forecasts, job numbers did.
“What’s affecting our assessment of the economy is the labour force data,” he said.
Senator Lambie asked Mr Lowe if he thought “the govt should be spending more money, now that we’ve spent less to plug those some of those holes, and keep the econony moving?”
Mr Lowe said “right now I don’t think they do”.
“But,” he said, “the issue will be in three, or four, or five months’ time, are we getting a solid bounceback? And are people getting jobs and are hours (of work) in the economy rising? If that’s not happening because either the virus re-emerges or people are just incredibly nervous to go out and spend because of their health or their jobs, then the Government will need to find more ways to support people.”
“At the moment, it’s plausible that this scheme could taper off, but it’s also plausible that further support will be needed, and, because of the uncertainty, I can’t say which world we’re going to be in. I think we needed a preparedness to do more if it’s necessary.”
Mr Lowe also encouraged borrowers to shop around when it came to interest rates.
“I always encourage people to shop around. Because in the Australian financial system, there are actually some very well priced products for consumers and one of the problems that we have is that people don’t take them up. So I encourage people to shop around. I know it’s not always easy but if we can shop around, people can get a better deal.”
He had been questioned over high interest rate charges on credit cards, and agreed with Senator Lambie that 20 to 21 per cent was “extraordinarily high”.
“I agree with you they are extraordinarily high and like you I can’t understand why they are so high,” he said. “I do however note that there are a lot of different products on the marketplace.”
“So if you’re paying 20 per cent, you certainly shoiuld be going to another credit card provider or another option within your bank with a lower interest rate, because there actually are credit cards available in Australia with moderately acceptable interest rates.”
“I know not everyone can switch but the best way to put pressure on the banks if they’re charging 20 per cent is for people to leave those products and go to ones where they are offering 10 or 12 per cent. It’s still high but it’s much better.”