The West Australian – Opinion: Kim Macdonald
Younger people wanting to buy a home, or who are newly on the property ladder, really have got the rough end of the stick when it comes to housing.
The interest rate system used by the Reserve Bank of Australia to control the pace of the economy — including housing, inflation, consumer spending, business borrowing and employment levels — effectively works against younger people.
The system used to work well, back when Australia had a fairly young demographic.
But with the ageing population, the burden has shifted to a proportionally smaller pool of mortgage holders.
To understand the phenomenon, according to property market analyst Gavin Hegney, you have to consider the impact of interest rates on various demographics.
His argument is based on the observation that one third of the population have an active mortgage, one third have paid off their home and one third rent.
Hegney points out that the 33 per cent of the national population with a mortgage have $2.4 trillion in mortgage debt. This means that every time interest rates increase by 0.25 per cent, they pay an extra $6 billion to their lenders.
Meanwhile, a substantial portion of those who have paid off their own home — mostly older people — pretty much get a pay rise every time there is a rate rise.