Millennials clash with Boomers in the battle of the housing market
A 27-year-old home loan document has reignited debate over which generation had the biggest mountain to climb in their quest to buy a place to call their own. Read more:
The document, uploaded to the Facebook group Perth Reflect, outlines ANZ bank’s various interest rates offered on “owner occupied” homes, as well as those available for “investment property loans”, both respectively effective as of February and March 1996.
The poster encouraged the group to discuss the find, and to share their experience with their own first home loans, with the caption “found this in our filing cabinet (1996) and was wondering what interest rates others were paying on their first home loan.”
In 1996, the East Start loan for a home was 7.95 per cent per annum, and a variable at 10.50 per cent. Fixed rates began at 8.69 per cent for one year term, and went up to 9.69 per cent for five years. Loan terms for homes were offered up to 25 years, and 20 for investment properties.
Meanwhile, in 2023, ANZ boasts a variable interest rate of 5.09 per cent per annum. Fixed index rates now begin at 5.69 per cent, 6.59 per cent for five years, and peak at 7.69 per cent for 10 years. This comes after Australia’s Reverse Bank passed down nine consecutive rises, with the cash rate reaching a 10-year high.
The reveal came as a surprise to some, with the numbers of paper appearing much worse for those trying to buy a property in the ‘90s. And in the Facebook comment section, some recalled how their actual rates were even higher than the document suggested.
“Paid 17.5 per cent initially, but was on variable,” wrote one of a purchase in the late ‘80s.
Another noted how those with a fixed term loan believed they had it “much better” at the time.
The younger members of the group, however, were quick to point out that while the numbers looked to be in favour of the older generation, the rates for 2023 did not accurately compare with those from 1996.
“Houses were a 5th of the price,” one wrote, referencing an old and recurring argument about the disparity in house prices over the years.
It was mentioned that while interest rates were high, prices were low, and “everything was affordable”.
The discussion over the impact of the cost of living on wages has been covered from all sides on many occasions, but it didn’t stop it from coming up in this debate too, with one commenter writing, “regardless [of] if wages have increased, everything else has increased twice as much.”
It led to the older members of the group circling back to a tired argument, too. One was determined to stop that line of argument in its tracks, suggesting that they’d been able to afford their home with the higher rates because they didn’t purchase takeaway coffee and “only ate out occasionally”.
This wasn’t to be taken lying down, with the younger generation refusing to allow that buying the occasional little treat was the reason they couldn’t get a foot in the door of their own home.
One member, perhaps realising that bickering wasn’t going to get them anywhere, decided to whip out a calculator and get to the bottom of it all.
Someone wrote that they paid $44k for a 3 bedroom home in 1986, with a yearly income of $31k behind them, before allowing that “maybe things weren't so tough”.
“If adjusted for inflation,” one said in response, before sharing their maths, “your income today would be $92k pa and the price you paid for your house would have been $131k.”
While both generations faced struggles with the property market, the challenges faced in 2023 are an entirely new beast, and one member of Perth Reflects shared their sympathy over the situation.
After explaining that they struggled through a 17.5 per cent interest rate themselves, they outlined the difference in their situation and their kids’, writing “my home loan was way less than what my kids are paying today”.
They bought land and built a house in High Wycombe on a loan of around $130k, and noted that it can be difficult - if not impossible - find a deal like that in even a country town, where prices tend to err on the ‘cheaper’ side of the scale.
“Wages are different,” they surmised, “but housing affordability has gone stupid and wages [have] not [been] increased accordingly.”
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