Shadow Treasurer Tim Wilson says younger borrowers will be hit harder by higher rates than boomers in 1990
Shadow Treasurer Tim Wilson has declared younger Australians will soon have it harder than the boomers when they paid 17 per cent interest rates in 1990. Here’s what he had to say.
An all-but-certain rate hike on Tuesday will see millennials facing tougher conditions than boomers experienced while paying 17 per cent interest rates in 1990, shadow treasurer Tim Wilson has claimed.
The Liberal Party, which traditionally draws its support from older voters, has weighed into a divisive generational debate to argue a 4.85 per cent cash rate, following the Reserve Bank’s Tuesday meeting, would see an average, full-time worker spending more than half their salary before tax on repaying their mortgage.
“A rate hike tomorrow would see more than half an average worker’s wage consumed just in serving their mortgage and hit harder than the 17 per cent rates in the 1990s,” Mr Wilson said.
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By continuing you agree to our Terms and Privacy Policy.The fifth rate hike this year, as expected taking the RBA cash rate to the highest level since late 2008, means younger and middle-aged borrowers taking on the typical loan are now suffering much more severe mortgage stress than the boomers did in February 1990 when rates were much higher, but housing was a lot cheaper compared with incomes.
NSW Premier Chris Minns, whose Labor State government stands to lose stamp duty revenue from falling house prices, said another rate hike would hurt Australia’s biggest economy.
“The impact of another rate rise on the New South Wales economy will be massive. There’ll be jobs that go that will never come back,” he told reporters on Monday.
“There’ll be shops that close that do not reopen with another rate rise. We can’t be flippant about this, this is a very, very tough call for them.”
Mr Wilson argued that under Prime Minister Anthony Albanese and Treasurer Jim Chalmers, borrowers are having a much tougher time than they did under former Labor PM Bob Hawke and his ambitious treasurer Paul Keating in 1990, because government spending is now much higher as a proportion of the economy.
“In the 1990s Australians were crunched by 17 per cent interest rates, but on current debt levels we are paying more today under Anthony Albanese and Jim Chalmers than Paul Keating”, Mr Wilson said.
“Because Jim Chalmers refuses to kick his spending addiction, more than half of an average wage is now being consumed just so families don’t lose their home, and with current debt levels it’s crunching Australians more than 17 per cent interest rates in the 1990s.
“If Jim Chalmers kicked his spending addiction, then inflation and interest rates would come down and mean families could stop taking items out of their trolley and putting them back on the shelf, instead he’s doubling down and causing shrinkflation at the supermarket and across the Australian economy.”
One more rate increase on Tuesday would see someone earning $108,352 and paying off an average new mortgage of $731,000 having to pay 52 per cent of their pre-tax salary servicing their repayments.
That’s based on a 6.65 per cent variable mortgage rate leading to average monthly repayments of $4690 from a monthly salary of $9029.
In February 1990, when the Reserve Bank cash rate was at 17 per cent, the average-income earner on $27,288 was paying 42 per cent of their $2274 monthly salary on average, mortgage repayments of $960.
Back then, the average new loan of $67,000 cost 2.5 times the average, full-time salary compared with 6.8 times now.
A borrower with an average, new mortgage of $731,000 would be buying a $913,750 house with a 20 per cent mortgage deposit.
That kind of budget would buy Melbourne’s median-priced house worth $906,067 following a 9 per cent plunge since the start of 2026, Cotality data showed.
But it would not buy the median-priced in Sydney, Brisbane, Perth or Adelaide, even though prices have dived in the face of rate hikes in February, March and May and September, and Labor’s Budget changes to negative gearing and capital gains tax concessions.
On a quarterly basis, Brisbane is the worst affected market with its house values diving by 6.2 per cent since the start of July to $1.112m.
Perth’s median house price since July has fallen by 5.6 per cent to $982,146.
“The mid-sized capitals, where home values recorded extreme growth conditions over the past six years, are now well and truly in correction,” Cotality’s research director Tim Lawless said.
Federal government spending now makes up 26.9 per cent of GDP, compared with 22.9 per cent during the 1989-90 financial year.
