![](https://onlineopinion.com.au/images/article-images/young_23_02_20.png)
(Courtesy of Graham Young, compiled from data from the Australian Bureau of Statistics)
The graph below shows home lending rates since 1959 against inflation rates.
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It shows that lending rates are almost always higher than inflation, with the exception of the 1973 to 1980 situation when inflation ran right out of control… and now.
For periods of stability and containment, interest rates are well-clear of inflation and less volatile than inflation.
The late 70s rise in rates also persisted well past a decline in inflation through to the early 90s.
That gives one clue as to where they may be heading now.
The other is given by the RBA governor, who notes he wants inflation in a band between 2 and 3 per cent. Over the period 1959 to 2022, the average gap between inflation and interest rates was 3.522 percent. That implies a long-term housing lending rate of around 6.5 percent.
The pain for the government and households is set to persist for quite some time yet.
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