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

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. 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. …