I started journalism in September 1987, at the office of a newspaper. A few weeks after I first signed, stock markets around the world crashed and the Dow Jones Industrial Average fell 23% in one day. Two years later, I married a man with a big mortgage on a small apartment. Interest rates were a crushing 17% and every month we opened our bank statement shaking hands, wanting the numbers to go down.
I learned two things: stock markets can fall off a cliff in real time and interest rates go up and down. Deep down, I am convinced that a financial disaster can happen at any time. I have never invested directly in the sharemarket and I hate being in debt.
Which makes me a conflicted observer of the latest interest rate hike panic. Watching a story about mortgage stress on the news last week, I said to my partner, “What did they expect? Why would you borrow so much money and not know that rates would go up? He was more empathetic, pointing out that people need a place to live.
Timing is everything, and I was lucky enough to be born at the very end of the baby boom, which means with free higher education and decades of rising wages, I’m perfect for every song. by Cold Chisel on Triple M.
Australians are much less socially mobile than 40 years ago when I left Toowoomba High and went to Sydney Uni. Today, I would vote for any party that promised to remove the negative gear and impose a wealth tax; there is no reason why middle-class children should thrive by accident of birth. And the level of government support for independent schools is a national disgrace.
But living with high interest rates in 1989 affected us all deeply. We didn’t eat out, go on vacation, or even think about starting a family. Like a sword of Damocles, the mortgage weighed on us, changing all aspects of our behavior.
Several of my friends have sold their properties and moved back in with their parents. Others took on a roommate or a weekend job, hoping that an extra $100 a week would keep the bank from foreclosing. Occasionally we would bring food to friends and share bottles of cheap wine, celebrating the fact that we still had a roof over our heads. We have clung to these properties by our fingernails.
Twenty years ago, I received a modest inheritance from my aunt. This windfall made my head spin with lucrative ideas, which I presented to an investment expert. His advice was very clear: put the money on the mortgage. The family home was our biggest tax shelter and we should treat it as our most valuable financial asset, he said, followed by the retirement pension.