Reserve Bank Governor Philip Lowe paid his mortgage with work perk
Reserve Bank Governor Philip Lowe paid off the mortgage on his family home at half the interest rate everyday Australians paid thanks to a generous work perk.
Dr Lowe, who on Tuesday raised the cash rate for the 10th month in a row to 3.6 per cent, bought his home in Randwick, in Sydney’s east, for $1,075,000 in April 1997.
The five-bedroom house 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 interest, the central bank confirmed to Daily Mail Australia.
Another $151,000 was borrowed directly from CBA, believed to be without a discount, and the rest in cash.
Reserve Bank Governor Philip Lowe outside his home in Randwick, in Sydney’s east, with his daughter. He bought it in 1997 with the help of a loan from the RBA at a half-price interest rate
The five-bedroom house would have cost just under $2 million today after inflation, and similar homes in the area are now valued at more than $4 million
Dr Lowe sold his previous home in Bondi Junction for $481,000 in June 1997, and his wife Jocelyn Parker offloaded hers in Paddington for $430,000 in September 1996.
The couple were likely able to afford such a small deposit relative to the house’s cost due to the sale of their old properties.
The RBA said both of Dr Lowe’s loans were paid off ‘several years ago’ and he and his wife were mortgage-free.
Dr Lowe was paid $890,252 in base salary in the 2022 financial year, plus $8,870 in various perks and allowances and $115,171 in superannuation.
The RBA Officers’ Home Advances Scheme ran until 2001 and by 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 analyst in data analytics at the Australian Prudential Regulation Authority.
The street on which Dr Lowe’s house sits, as seen in 1997 when he bought the property
Dr Lowe on Tuesday raised the cash rate for the 10th month in a row to 3.6 per cent
They both get complimentary access to Qantas Chairman’s Lounge, and Dr Lowe free access to Virgin Australia lounges and membership of the National Press Club.
He’s been given free tickets to various dinners and balls like the Lowy Lecture, BCA, AFR, and Westpac charity fundraiser.
Qantas gave him a 2022 bottle of Bottle of Piper-heidsieck Rare Millesime Champagne in 2019 that he donated to the Reserve Bank Benevolent Fund.
The couple have no investment properties but Ms Parker has an estate trust and Dr Lowe some Telstra shares and exchange traded funds.
Ms Parker has Telstra and CSR shares, and their children have have Telstra shares, ETFs, and ‘very small holdings in selected ASX listed companies’.
They both have credit cards (Dr Lowe with CBA, Ms Parker with NAB) and Vanguard, Colonial First State managed funds.
Superannuation for both is with Sunsuper, and what little their children have so far is with BT Super.
Dr Lowe (pictured at the Bonnie Doon Golf Club in Pagewood in Sydney’s south-east) played so much golf during Covid lockdowns that his handicap dropped from the low 20s to mid-teens
Dr Lowe grew up in Wagga Wagga, in the NSW Riverina, the eldest of five children, his mother a school-teacher and his father a small business owner.
He attended local schools St Michael’s Regional High School and Trinity Catholic College, where he was the dux of both.
His enthusiastic economics teacher Mrs King spurred his interest in banking, and he decided to pursue it as a career hallway through Year 12.
Dr Lowe’s parents couldn’t afford to send him to university so he, with the help of Mrs King, applied for and got a RBA scholarship to the University of NSW, where he took night classes while doing clerical work for the RBA aged 17.
He did so well on his first year exams the bank told him to study full time, and he graduated with first-class honours and the University Medal in 1985.
After working at the bank full time after that, the RBA sent him to MIT in 1987-91, where he got a PhD in economics.
Dr Lowe eventually rose to deputy governor in 2012, earning about $700,000 a year, until he was named governor in 2016.
After suffering two near-death experiences in 2016, he swims 1-2km at least three times a week, goes cycling, and plays golf with his son on weekends.
He played so much golf during Covid lockdowns that his handicap dropped from the low 20s to mid-teens.
What the latest 0.25 percentage point rate rise means for you
$500,000: Up $77 to $2,814 from $2,737
$600,000: Up $93 to $3,377 from $3,284
$700,000: Up $109 to $3,940 from $3,831
$800,000: Up $124 to $4,503 from $4,379
$900,000: Up $140 to $5,066 from $4,926
$1,000,000: Up $155 to $5,628 from $5,473
Monthly repayment increases based on a Commonwealth Bank variable rate loan rising by a quarter of a percentage point to 5.42 per cent, up from 5.17 per cent, to reflect the Reserve Bank cash rate rising to 3.6 per cent from 3.35 per cent. Relates to a borrower with a 30-year loan.
Dr Lowe told a breakfast on Wednesday morning this month’s 10th consecutive increase may be one of the last, a day after rates were raised to an 11-year high, up 0.25 percentage points from 3.35 per cent.
Variable rate borrowers have seen their monthly repayments surge by 46 per cent in just 10 months.
The major banks are still expecting more rate hikes in April and May that are more likely to adversely affect borrowers who only recently took out a loan, when the RBA cash rate was still at 0.1 per cent.
‘We also discussed that, with monetary policy now in restrictive territory, we are closer to the point where it will be appropriate to pause interest rate increases to allow more time to assess the state of the economy,’ Dr Lowe told the AFR Business Summit 2023 in Sydney.
‘Our assessment is that the more recent rate increases have moved monetary policy into restrictive 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 jobs and more pain’.
Dr Lowe’s seven-year term as RBA governor expires on September 17 and Treasurer Jim Chalmers is waiting on the report of an independent review of the central bank before deciding whether to renew it.