I can't help but feel embarrassed and increasingly angry each time I hear Kevin Rudd or Wayne Swan talk about mortgage stress.

Although they say publicly they are doing everything they can, for six months now they have been sitting on a mortgage relief plan to that would cut the Reserve Bank rate hikes over the same period in half (in fact a little more).

I understand the need to control inflation, but the brakes are hitting hardest on housing finance, which does nothing to control the cost of food or fuel. It just makes it harder, more expensive and less likely for people to keep a roof over their heads.

If you think this is a problem, a petition was launched today demading action on the plan that is sitting gathering dust on Wayne Swans desk.

You can find it here: http://www.ipetitions.com/petition/mortgagerelief/index.html

What are your thoughts?

The prime drivers of inflation this time are fuel,food State Govt taxes and charges.Fuel and food are relatively inelastic, ie people have to buy it in order to survive.Putting up interest rates will not stop OPEC from increasing the price of crude nor West Farmers or Woolies who almost monopolise the market,from doing likewise.It is not wages driven.

Over the last few yrs we have seen our living standards fall dramatically under the guise of the need for environmental restraint,which was an absolute con.Aust has plenty of energy,food and resources.We have a $ trillion GDP or we produce $50,000.00 pa for every man woman and child.Where has all the wealth gone?

The real reason for the rate increases is to prop up the banking system which invested badly in Sub-prime mortages in the US.Capitalise the profits and now socialise the losses by increasing interest rates!The RBA is complicit in this con,since they have given the green light to the banks to increase rates at will.This also conviently takes the heat off the RBA.

Aussies should be very angry,since not only do we give away our energy and resources for a song,we now have to suffer the indignity of paying for the poor decisions of our greedy banking system!

Totally agree Arjay, hence the plan which actually takes margin out of the finance sector and puts it back into the equity of home owners.

Begs the question as to why the government is standing idle.

Over the past 10 years or so we have all taken advantage of cheap debt to an extent that we have now borrowed far more than we earn. We don't get rich by spending and consuming, we get rich by producing and selling. The chickens have now come home to roost because we have all been living beyond our means, borrowing to speculate in houses, the stock market, derivatives and just plain luxuries. Well I'm afraid the party is ending. Get used to it.

Arjay,

Australia since at least the 1980s has been the wealthiest nation on the planet [not the largest econony] [Philip Kotler citing the World Bank]. This measure is Gross ASSETS/population:thAT IS is asset wealth, not income.

In the US, the exposure to sub-prime mortgages is much higher than Oz. We are in a better position with regards unproductive mortgage exposure. Our today are experiencing liquidity problems and some bad loans.

In 2009/10, they will have the problem of receiving lower raes on deposits while paying higher raates on term deposits lodges now. Perhaps, that is why the Banks have broken away from closely following the RBA's direction?

About 3-4 years ago, the US administration decided to let Housing take the brunt of the US downturn, rather than the USD. Since then both have happened.

Australia is in minerals boom and it has trade surpluses with both China and Japan. Historically the trade weighted value of the AUD:USD has had the AUD over parity with the USD.

The greater wealth is probably going to those rich enough to invest in the first place. I once asked Peter Costello what Australia's ideal Ginni Co-efficient [a measure of welth distrubution] should be and he would not answer me.

There has not been a full census of Australia's wealth distribution since 1915 [The churches, I think, attempted a big sample try about a decade ago].

Snake,

Whilst I totally agree that we don't get rich spending and consuming. I also agree that credit has been cheap for quite a long time, which has lulled much of society into a false sense of security. However, I don't agree that 'speculation' is the right term for many people buying their own home who are affected by the current rate situation.

Buying a home is a more of a cultural tradition rather than investment speculation and on that basis, I argue that there are a great deal of people who deserve some sort of assistance if it is possible. The mortgage relief plan requires a very small public investment for a large community benefit.

In current rate conditions, a significant number of ordinary people find themselves under a great deal of financial pressure as a result of the culmination of a number of other economic factors. It is my view that these people should be entitled to help if it is available.

The mortgage relief plan shifts margin away from the lenders and over to the borrowers. Whilst I hear the lenders screaming about the need to raise rates, the reality again, is that there is not a single lender amongst them that is facing any real loss.

The consumer in this case, rather than the shareholder, is picking up the cost of business practice undertaken by their lender.

Unlike luxury items such as wine and dvds, the house is already purchased and for all intents, iliquid. The loan contracts are inevitably riddled with discharge, penalties and deferred establishment fees so under the current structure, the consumer is somewhat trapped.

Most of the people I am talking about here, and there are large numbers of them, undertook a complex loan agreement and trusted, to some extent that the lender would take care of them. Regardless of whether, as an educated person you consider this foolhardy, my question remains that if we can shift some of the margin away from the lender to these people to buy them relief, why shouldn't we? Surely you couldn't be that mean spirited.