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Younger generations are getting the “short end of the stick” as a result of soaring interest rates but older generations have been spared the pain, according to David “Kochie” Koch.
Kochie, former Sunrise host and now Economic Director at Compare the market, said young borrowers are being hit hardest by rising interest rates and soaring inflations.
“If you bought your home in early 2022 under the pretence that interest rates would stay low for longer, you’ve now been lumped with the short end of the stick,” Mr Koch said.
Data from Compare the Market has revealed that homeowners who bought property at the peak of the market in early 2022 are worse off each month than those who bought three years earlier.
Mr Koch said people struggling with higher repayments should look into whether refinancing to a lower rate could help them save.
He said the rate hikes haven’t affected many ‘mature Australians’ and added it’s widely thought that their spending is what has driven inflation.
“It’s time policymakers should be asking, ‘how could the pressure be more evenly spread’,” said Mr Koch.
According to the recent report published by Compare the Market, a Sydney homebuyer who purchased a house at the median price of $1,127,723* in April 2022 with a fixed rate of 2.2% could be looking at minimum monthly repayments of $2,247 when their rate expires next year.
Yet someone who purchased a house for the median price of $780,672 just three years earlier may have seen repayments only rise $1,576.
Which is $671 less than those who purchased at the peak.
Their example in the report details the median house price in Sydney is just shy of its previous record, which has benefited those borrowers.
Kochie said it’s a tough pill for younger borrowers to swallow, who had not had time to accrue strong savings buffers but are now among the hardest hit.
“Meanwhile, a lot of mature Australians have missed this pain altogether after selling their properties at the peak and having reaped the benefits of more equity for years,” he said.
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