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.
Rubbish, there was nothing to spend on unless you call food and clothing discretionary spending...couldn't afford a car, TV, travel..no computers, no smart phones to buy every year, eating out was a huge event, the list goes on..
I honestly don't see myself buying a house. I don't lead a lavish lifestyle and still it's unattainable.
I don’t know where boomers got the idea from we bought ornate houses and $60K cars. My friends and I all have normal homes, less snazzy than the multi million dollar ones are parents in live in and don’t have new cars
they buy new EB games & the latest phone though - I had two SPC Fruit tin cans tied to a string at either end for a phone, but that's not counted right... 🤣🤣🤣
Real wages are a fraction of what they were. Due to much larger workforce.
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Source: 7NewsMelbourne - 🏆 18. / 59 Read more »