Terry Rawnsley crunched 40 years of ABS data and found Australia's mortgage burden is now higher than it was when the RBA cash rate hit 17.5%
Terry Rawnsley did not set out to start an argument. The KPMG urban economist set out to test one – the claim, repeated around every Australian kitchen table, that previous generations had it harder when mortgage rates were running at 17%. His finding, published this week, is unambiguous.
"Things are tougher now than at that 17% period," Rawnsley told SBS News.
The analysis drew on Australian Bureau of Statistics data (ABS) across 40 years. In early 1990, interest payments as a share of total household income peaked at 5.7%. By 2023 that figure had reached 5.9%. In Q2 2026 it sits at 5.4% – still above the 1989 benchmark – and is positioned to keep rising as three RBA rate cuts this year flow through to borrowing rates.
"In the past, paying off a home loan has been a source of security," Rawnsley told the Guardian. "It's increasingly a source of anxiety."
What the numbers behind the numbers say
The aggregate burden figure is the conservative version of the story. It averages across all households – including those who bought decades ago at much lower prices and carry modest remaining debt. The picture for anyone entering the market today is sharper.
Mortgage payments on a new loan now require around 45% of household income nationally, according to Finder data for 2026 – down from a peak of 50.3% in 2024-25 following RBA rate cuts, but still well above anything seen in the late 1980s. In Sydney, where median house prices are 13.8 times median household income according to Cotality, the burden is higher still.
The 1989 rate of 17.5% was brutal, briefly. It peaked in January 1990 and fell sharply within two years as the RBA reversed course. The average new home loan in Australia is now $736,000, according to ABS data from December 2025. A household borrowing that amount at today's variable rate of 5.93% carries a larger total debt load – and faces a longer period of elevated payments – than the borrowers of 1989 were ever exposed to, despite their significantly higher rate.
Three things the 1989 comparison consistently omits:
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Prices are now 8x income, not 3x. Nationally, Australian dwellings are valued at 8.2 times median household income (Cotality, 2025). In Sydney that ratio is 13.8 times. In the late 1980s, homes cost roughly three to four times average household income. The rate was higher; the house was cheaper; the debt was smaller.
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Saving a deposit now takes nearly 12 years. At typical savings rates, the average first home buyer needs around 11.9 years to accumulate a 20% deposit, according to Finder (2026). In the 1980s, entry was possible far sooner, at much lower price multiples.
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Variable rate mortgages mean exposure runs longer. Australia's dominant variable rate structure means today's elevated payments are not a brief spike but a sustained condition. The 1989 generation largely rode out their peak within 18 to 24 months. A buyer at $736,000 today faces years of structural debt service at income multiples that were simply unavailable to 1989 buyers because the houses were not that expensive.
When a client's parents describe surviving 17% rates as evidence that today's buyers are soft, the answer is now documented in 40 years of ABS data.
The rate was higher. The house was cheaper. The debt was smaller. The deposit was faster to save. Today's borrower faces lower rates against asset values that have decoupled from incomes over 30 years of structural undersupply. Which generation carried the bigger burden depends on which number you choose to look at – and Rawnsley has done the work of choosing the right one.
Mortgage brokers facilitated 77.6% of all residential lending in the June 2025 quarter, according to the MFAA. The clients coming through the door are navigating the most structurally unaffordable market in the dataset's history. The 1989 comparison is not just nostalgic. It is actively misleading. The data now says so.
