Reserve Bank Governor Philip Lowe paid off the mortgage on his family’s home at half the interest rate Australians pay every day thanks to a generous employment benefit.
Lowe, who on Tuesday raised the cash rate for a 10th straight month to 3.6 percent, bought his Randwick home in eastern Sydney for $1,075,000 in April 1997.
The five-bedroom home would have cost just under $2 million today after inflation, and similar homes in the area are now valued at more than $4 million.
He partly paid for the house with a $241,000 loan from the RBA that was locked in at half the Commonwealth Bank’s standard variable rate, the central bank confirmed to Daily Mail Australia.
A further $151,000 was borrowed directly from CBA, believed to be at no discount, with the remainder in cash.
Reserve Bank Governor Philip Lowe outside his home in Randwick, eastern Sydney, with his daughter. He bought it in 1997 with the help of a loan from the RBA at half the interest rate.
Dr. Lowe sold his previous home in Bondi Junction for $481,000 in June 1997, and his wife Jocelyn Parker sold theirs in Paddington for $430,000 in September 1996.
The couple were likely able to pay such a small deposit relative to the cost of the house due to the sale of their former holdings.
The RBA said Dr Lowe’s two loans were paid off “several years ago” and that he and his wife had no mortgage.
Dr. Lowe was paid $890,252 in base salary in fiscal 2022, plus $8,870 in various benefits and allowances and $115,171 in retirement.
The RBA Officers’ Home Advances Scheme operated until 2001 and in 2003 a quarter of its staff were still reaping the benefits. Only 11 are still employed by the RBA today.
Dr. Lowe and Ms. Parker met in the early 1990s while they were both working at the RBA and now have three children.
Ms Parker is now a Principal Data Analytics Analyst at the Australian Prudential Regulation Authority.
Dr. Lowe on Tuesday raised the cash rate for the 10th straight month to 3.6 percent.
Both get complimentary access to the Qantas Chairman’s Lounge, and Dr Lowe has free access to Virgin Australia Lounges and National Press Club membership.
They have given her free tickets to various dinners and dances like the Lowy Lecture, BCA, AFR, and the Westpac charity fundraiser.
Qantas gave him a 2022 bottle of Piper-heidsieck Rare Millesime Champagne in 2019 which he donated to the Reserve Bank Benevolent Fund.
The couple have no investment property, but Ms. Parker has a real estate trust and Dr. Lowe some Telstra shares and ETFs.
Ms Parker holds Telstra and CSR shares, and her children hold Telstra shares, ETFs and “very small holdings in select ASX-listed companies”.
Both have credit cards (Dr. Lowe with CBA, Ms. Parker with NAB) and funds managed by Vanguard, Colonial First State.
Retirement for both is with Sunsuper, and the little their children have so far is with BT Super.
Dr Lowe (pictured at Bonnie Doon Golf Club in Pagewood, Sydney’s south-east) played so much golf during the Covid lockdowns that his handicap dropped from the low 20s to his mid-teens.
Dr Lowe grew up in Wagga Wagga, on the NSW Riverina, the eldest of five children, his mother a school teacher and his father a small business owner.
He attended the local schools St Michael’s Regional High School and Trinity Catholic College, where he was duke of both.
His enthusiastic economics teacher, Mrs. King, stimulated his interest in banking and he decided to pursue it as a career in mid-year 12.
Dr Lowe’s parents couldn’t afford to send him to university so with the help of Mrs King he applied for and was awarded an RBA scholarship to the University of NSW where he took night classes while doing administrative work for the RBA at age 17.
He did so well in his first-year exams that the bank told him to study full-time, and he graduated with first-class honors and the University Medal in 1985.
After working at the bank full time, the RBA sent him to MIT in 1987-1991, where he earned a Ph.D. in economics.
Dr. Lowe eventually rose to lieutenant governor in 2012, earning about $700,000 a year, until he was appointed governor in 2016.
After suffering two near-death experiences in 2016, he swims 1-2 km at least three times a week, cycles and plays golf with his son on weekends.
He golfed so much during the Covid lockdowns that his handicap dropped from the low 20s to his mid-teens.
What the latest 0.25 percentage point rate hike means to you
$500,000: Up to $77 to $2,814 from $2,737
$600,000: Up to $93 to $3,377 from $3,284
$700,000: Up to $109 to $3,940 from $3,831
$800,000: Up to $124 to $4,503 from $4,379
$900,000: Up to $140 to $5,066 from $4,926
$1,000,000: Up to $155 to $5,628 from $5,473
Monthly repayment increases are based on a Commonwealth Bank variable rate loan increasing by a quarter percentage point to 5.42%, up from 5.17%, to reflect the Commonwealth Bank cash rate increase. Reserve at 3.6% from 3.35%. Refers to a borrower with a 30-year loan.
Dr. Lowe said at a breakfast Wednesday morning that the 10th consecutive rise this month may be one of the last, a day after rates rose to an 11-year high, 0.25 percentage point from the 3.35 percent.
Variable rate borrowers have seen their monthly payments increase by 46 percent in just 10 months.
Major banks are still expecting more rate hikes in April and May that are likely to negatively affect borrowers who recently took out a loan, when the RBA cash rate was still at 0.1 percent.
“We also discussed that, with monetary policy now in tight territory, we are closer to the point where it will be appropriate to stop interest rate increases in order to have more time to assess the state of the economy,” Dr. Lowe said. at AFR Business Summit. 2023 in Sydney.
“Our assessment is that the most recent rate hikes have pushed monetary policy into tight territory, which has been necessary to ensure that the current period of high inflation is only temporary.”
Dr. Lowe stuck to his lines that higher inflation would lead to higher interest rates with “people losing their jobs and more pain.”
Dr Lowe’s seven-year term as RBA governor expires on September 17 and Treasurer Jim Chalmers is awaiting the report of an independent central bank review before deciding whether to renew it.