How younger borrowers are now spending more of their income on their mortgage than baby boomers

Baby boomers are often fond of telling anyone who will listen that they were paying 17.5 per cent interest rates in 1990 and they had it much harder than today’s young people splurging money on smashed avocado with artisan sourdough.

But new analysis from the REA Group, the company behind Australia’s most popular property search site realestate.com.au, shows today’s borrowers are actually paying more of their income in repayments than their parents did a generation ago.

That is especially the case in Queensland where home prices have surged since COVID.

Mortgage repayments on a typical home now consume 39.7 per cent of the average household income in the Sunshine State - up from 34 per cent a year ago after the Reserve Bank in 2026 raised interest rates three times to 4.35 per cent.

It’s now harder to service a mortgage than it was in 1990, when the RBA’s target cash rate was at 17.5 per cent, and in 2008, before the global financial crisis, when it was at 7.25 per cent, with home prices now a lot more expensive compared with incomes.

In those cases, mortgage repayments took up 36 per cent of pay.

While Brisbane’s median house price fell by 2.9 per cent in the three months to August 31, values are still 10.3 per cent higher than they were a year earlier, Cotality data showed.

The mid-point price of $1.181 million would require a combined household income of close to $197,000 just to get into the market with a 20 per cent mortgage deposit.

This is much higher than Australia’s median household income of $125,000 which REA Group economists Angus Moore and Luc Redman calculated would buy just 12 per cent of homes that sold.

Across Australia, mortgage repayments consume 35.5 per cent of the average household income - the highest since 1989 when interest rates were at 18 per cent in the era before the RBA had a target cash rate.

It’s also higher than the 33.3 per cent level of early 2008 before the GFC rate cuts.

A couple saving 20 per cent of their income to get into the housing market would have to make sacrifices for six years, but in Queensland, that rises to a record-high six years and eight months which is above the 2008 and 2010 peaks.

The Housing Affordability Report noted the recent drop in house prices - as a result of rate hikes and Labor’s changes to negative gearing and capital gains tax concessions - were doing little to making it easier to service a mortgage in a State receiving a big influx of new arrivals from other parts of Australia.

“Despite recent price softening, it has not been enough to offset increases in mortgage rates,” it said.

“Likewise, incomes haven’t been able to offset this, as growth has lagged prices.”

National housing affordability has reached an all-time low in 2026, even in the face of potentially the biggest downturn since 1983.

Prices in most State capital cities, with the notable exception of Melbourne, peaked this year but the decline is unlikely to get more first homebuyers into the market.

“Looking ahead, affordability may improve marginally if home prices continue to soften, but this is unlikely to be a turning point for many buyers,” Mr Moore said.

“Without a meaningful increase in housing supply, affordability will remain a significant challenge, particularly for lower-income households.”

This is a particularly stark picture given a household on $76,000 can only afford just 2 per cent of homes sold.

The burden on borrowers is unlikely to get easier with the futures market seeing at least another hike in 2026, that would take the cash rate to a 15-year high of 4.6 per cent, and no relief in 2027 with inflation forecast to remain at elevated levels.

Boomers would be right to point out that interest rates would still be lower than they were throughout the 1990s.

But given Australia’s population surge since the 2000s leading to a housing shortage, they would be wrong to suggest they did it harder, even if they didn’t take overseas holidays or spend their old paper banknotes on smashed avocado with feta.