Today’s larger home loans outweigh the pain of 17% rates, analysis finds

Today’s home buyers can face a heavier repayment burden than borrowers did when mortgage rates reached 17 per cent around 1990, according to new analysis published on Monday.

Research undertaken by Primara Research for HomeLoanRates.com.au compared average home loans, mortgage repayments and median incomes in 1990 with current figures.

It found that loan balances were typically 10 to 13 times larger than they were in 1990 and that borrowers were committing about 15 per cent more of their income to repayments.

The comparison helps explain why the headline interest rate does not tell the full story. A much lower rate applied to a substantially larger debt can consume more household income than a high rate applied to a comparatively small loan.

It also highlights the pressure confronting people who bought recently. Long-term owners may have smaller outstanding balances, accumulated equity or no mortgage at all. Recent buyers are more likely to be servicing a loan that reflects current property prices and to feel each rate increase more immediately.

Sydney borrowers face the largest ratio

The analysis estimated that Sydney’s average mortgage had increased from $84,594 in 1990 to $841,693 in 2026. Repayments on the current average loan were equivalent to 66 per cent of a median income.

Adelaide recorded the largest deterioration in the comparison. The estimated repayment burden increased from 42 per cent of median income in 1990 to 57 per cent in 2026.

In Brisbane, the average loan was calculated to be 13 times larger than in 1990, while repayments increased from 46 per cent to 59 per cent of median income.

Primara estimated that another quarter-percentage-point interest-rate rise would lift the ratios to 67 per cent in Sydney, 61 per cent in Brisbane and 59 per cent in Adelaide.

These figures are best treated as an affordability comparison rather than a count of households experiencing financial hardship. They compare an average mortgage with a median income, while actual borrower circumstances depend on whether a household has one or two incomes, the size and age of its loan, living costs, dependants and available savings.

The commonly used threshold of spending 30 per cent of income on housing is also a broad warning indicator rather than a complete test of mortgage stress. A higher-income household may have more money remaining after repayments than a lower-income household spending a smaller percentage.

Even with those qualifications, the comparison demonstrates how property prices and loan sizes have changed the effect of interest rates.

Why recent buyers are more exposed

A buyer who entered the market years ago may have benefited from income growth while gradually reducing their principal. A household that bought in 2025 or 2026 generally starts with a much larger balance and has had little time to build a repayment buffer.

Falling property prices can add another complication. Lower prices may help future buyers, but they do not reduce the balance of an existing mortgage. A recent owner who needs to sell may also have less equity available after transaction costs.

For prospective buyers, the lesson is not simply to wait for a lower advertised price. A cheaper property can remain unaffordable if borrowing capacity falls or mortgage rates rise. Repayment resilience should therefore be tested independently of a lender’s maximum approval.

Borrowers already under pressure can contact their lender’s hardship team before missing repayments. Options vary but may include changing the repayment arrangement, temporarily reducing payments or extending the loan term. Those measures can increase total interest costs, so independent financial counselling may be useful before making a long-term change.

What it means for you

• Buyers should calculate repayments at rates above today’s offer, not rely only on the lender’s maximum loan amount.
• Recent owners should preserve offset or redraw buffers where possible and seek help before falling behind.
• Falling prices do not automatically improve affordability when interest rates and borrowing limits are also moving.
• Sellers carrying a large mortgage should calculate their likely net proceeds after agent fees, legal costs and loan discharge expenses.