The only statement that has taken my notice this federal election has been that "under a Labor government interest rates will rise." The morgage broker I recently spoke to said it a little less kindly, "under a Labor government we're all screwed."

I'm not a sad person who only watches house prices, it's just this was the only claim I hadn't seen before and suddenly it's as if it was common knowledge.

I refused to believe that the government in power had anything to do with interest rates beyond a single percentage point. To blame labor for the 17% interest rates of the late 90's is insane. I'm of the school of thought that it either would have happened anyway, or it was a combination of world economic flow for the 10 to 20 years before the 90s. Sure I have no idea what I'm talking about but you'll never convince me you have proof any single government has any control over this stuff.

This article from Robert Corr [via VM trackback] (rather Labor leaning but seemingly well researched) explains that not only is it wrong to assume interest rates will raise just because Labor gets in, but that it isn't the point.

House affordability. In looking for a home recently it hasn't really been the interest rate that has been the issue. It's the initial cost of the house. The one thing I have been hearing about constantly for the past few years is that housing affordability is at a record low. Is that Howard's fault?

In 1996, the average loan for first home buyers was $94,400 with average monthly loan repayments of $891; while the average mortgage for all borrowers was $97,600 with average monthly loan repayments of $922.

By June 2004, the average loan for first home buyers was $204,000 with average monthly loan repayments of $1,448; while the average mortgage for all borrowers was $202,700 with average monthly loan repayments of $1,439.

and...

A record household debt of over three-quarters of a trillion dollars - up by nearly $500 billion in just 8 years

According to the Reserve Bank of Australia, mortgage interest payments chew up more of the family budget than ever before

Average home loans have more than doubled under the Howard Government; and

Australian are now spending more than they earn with the Household savings rate negative and at record lows

Median household income in 1996 was $637 per week [ABS 1996 census]. I can't find any reliable stats on 2004 incomes. Next census isn't due until 2006.

That's why interest rates are such a big deal. Not just for the sake of them, but that in the last 10 years loans have grown so much that if the rates did go up so many people who got into loans too far over their heads are going to be in big big trouble.

And that isn't Labor's fault.

And neither is the war on Iraq.