It’s a common barb that newer generations are struggling with home ownership because of profligate spending. But millennials spend less of their incomes on “discretionary” items than people of the same age did decades ago. | OPINION by Joey Moloney and ...
The Reserve Bank has lifted the cash rate for the second time in two months, this time by 0.50 points to 0.85 per cent.
But the refrain misses the full story. High house prices have changed the game, making it much harder for today’s borrowers. This has meant that for any given mortgage rate, the share of income taken up by mortgage payments is much, much higher.If you have a small loan with a high rate, all you need is a cut in rates, some inflation and decent income growth, and your mortgage burden can fall sharply.Borrowers in the 1990s who started out devoting more than 30 per cent of their income to paying off a mortgage found themselves devoting just 12 per cent by the time the loan was halfway through.
It’s a common barb that newer generations are struggling with home ownership and housing costs because of” items – such as alcohol, clothes and household services – than people of the same age did decades ago.What millennials are spending much more on is housing, simply because houses are so much more expensive.
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