Australia’s mortgage burden is now above 1989 levels – when interest rates were 17%

The late 1980s and early 90s are often cited as the historical peak for home loan stress but data shows borrowers faced tougher conditions in recent years, says KPMG’s Terry Rawnsley. Photograph: Darren England/AAP View image in fullscreen The late 1980s and early 90s are often cited as the historical peak for home loan stress but data shows borrowers faced tougher conditions in recent years, says KPMG’s Terry Rawnsley. Photograph: Darren England/AAP Australia’s mortgage burden is now above 1989 levels – when interest rates were 17% KPMG analysis rebuts claims older generations had it harder when it came to buying and paying off a home Get our breaking news email , free app or daily news podcast Australia’s national mortgage burden is heavier now than it was when lending rates reached 17% at the end of the 1980s, new analysis reveals. Terry Rawnsley, an urban economist at KPMG , said his research was in part a “myth-busting” exercise aimed at rebutting oft-repeated claims that previous generations had it harder when it came to buying and paying off a home. “From this perspective the data tells a pretty clear story,” Rawnsley said. “In the past, paying off a home loan has been a source of security, it’s increasingly a source of anxiety.” Mortgage rates hit 17% in mid-1989 (the Reserve Bank’s cash rate peaked at 17.5% in 1990) and stayed around that level for close to a year, according to RBA historical data. The KPMG analysis shows how in early 1990 interest payments as a share of household income reached 5.7%, with interest on dwellings at 3.4% and interest on consumer debt of 2.3%. Graph showing Australia's mortgage burden between the late 1980s and now Fast forward to early 2026, when home loan rates averaged 8.3% through the three months to March. Soaring home values have pushed homebuyers to borrow more and more over recent decades, even as home ownership rates have tracked steadily lower. House prices fall in four capital cities as Sydney values drop nearly $50,000 this year Read more Despite lending rates being only half what they were at the end of the 1980s, households in total were dedicating a much higher 5% of their income to servicing their mortgages, and 5.4% once consumer debt obligations were included. The total debt burden figure will push towards 6% once the full impact of this year’s three interest rate hikes flow through to borrowing rates, Rawnsley said. He said while the late 1980s and early 90s were often cited as the historical peak for home loan stress, “the data shows that borrowers have actually faced tougher conditions over the past few years”. Of course, homeowners faced other challenges then – not least an unemployment rate that pushed into double digits. Rawnsley said the data he analysed was a combined total of household income and interest payments – and that within the high level numbers was concealed a wide range of outcomes. “This aggregate number is the best we can look at,” he said. skip past newsletter promot