Interest rates have hit their highest level since 2011. The pain will feel different in 2026
Australian households are taking on much bigger mortgages than they were 15 years ago. And our incomes haven’t kept up, either.
The Reserve Bank of Australia has raised the cash rate to 4.6%, the highest level since 2011, as inflation remains strong and global energy prices surge due to the ongoing conflict in the Middle East. Home loan sizes have doubled in recent years, making today's 4.6% rate a heavier burden for borrowers compared to 15 years ago. While incomes have increased, they've grown at a slower pace than housing debt.
As a result, mortgage payments now consume nearly 10% of household disposable income, up from a 2024 peak. First-time buyers, in particular, are struggling with larger loans and less time to build equity. If inflation persists and growth weakens, Australia could face stagflation.
Written by urgent.news from The Conversation AU's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
