Homeowners with mortgages are better off than previous generations

JUNE 13, 2018

The RBA left the cash rate on hold when it met earlier this month, the twentieth consecutive time the central bank has left the cash rate at a record low of 1.50%.

Angus Raine said that while low interest rates are a massive positive and that prestige property markets seemed to be enjoying plenty of activity, low inflation and sluggish wages growth are continuing to impact consumer confidence, making it difficult for the RBA to move rates.

A timely report from comparison website, RateCity makes the point that with interest rates are at historic low levels, Australians are in a better financial position than 28 years ago. In February 1990, interest rates hit a record high of 17.0-17.5%. RateCity spokesperson Sally Tindall noted, “When it comes to paying down the mortgage each month, when you factor in the record low interest rates, we’re actually better off.”

According to RateCity, if a single person took out an average sized home loan at 17% in 1990 they would have spent 42.45% of their income on mortgage repayments. Yet the same person today with an average mortgage would spend 28.91% of their income on mortgage repayments.

Housing affordability comparison 1990 and 2018


Cash rate 

Average loan size

Average annual wages 

% of income on mortgage

1990 (Feb)










Source: RBA lending indicator rates, ABS Housing Finance Australia, Housing Finance Commitments, ABS Average Weekly Earnings Australia – Original.