REMEMBER WHEN

GOLD COAST BULLETIN Thursday, August 9, 2007

AN interest rate rise was not only bad news for Generation Y - the 20 somethings - but it also worried the Baby Boomers who, it seems increasingly likely, would have to pick up the deposit for their children’s first home.

Eminent social demographer Bernard Salt said Generation Y was delaying mortgage, marriage and children because Australia had never lived in such prosperous times.

As widely tipped by financial markets, the Reserve Bank of Australia raised its cash rate to 6.5 per cent from 6.25 per cent - to its highest level since November, 1996.

This lifted the standard variable mortgage rate to 8.3 per cent from 8.05 per cent, adding more than $40 per month to an average mortgage of around $250,000, and taking a sizeable chunk of the tax cut average wage earners received from July 1 2007.

For the Gold Coast, where the average mortgage was $400,000, the monthly mortgage payment increased increase by $66.65.

Mr Salt said a further interest rate rise would simply squeeze more 20-somethings out of the new home market, as they struggled under the combined weight of credit card and HECS debts.

“This is a generation of consumers, They only know seemingly unlimited prosperity. Why would they want to save?’’ he said.

Mr Salt said Generation Yers were pushing back financial burden but this would impact on their parents.

“There is a real issue now with housing affordability and it is now much harder to buy a home than it was 30 years ago,”