David Koch says the younger generation have the ‘short end of the stick’ and that older generations have missed the pain of soaring interest rate rises.
Koch, who is the Economic Director for Compare the Market, said young borrowers are among the hardest hit by rising interest rates and soaring inflation.
Data from Compare the Market found homeowners who bought property at the peak of the market in early 2022 are worse off each month compared to those who bought three years earlier.
Koch said the research was a ‘tough pill’ for young Aussies who had no time to accrue a strong savings buffer.
He added mature homeowners missed the pain of soaring interest rates and have benefited by rising property prices.
![David Koch (pictured) said younger home loan borrowers haven’t had time to build up a strong savings buffer and are among the hardest hit by soaring inflation and interest-rate rises](https://i.dailymail.co.uk/1s/2024/01/09/03/79779121-12941239-image-a-47_1704769386847.jpg)
David Koch (pictured) said younger home loan borrowers haven’t had time to build up a strong savings buffer and are among the hardest hit by soaring inflation and interest-rate rises
![Those who bought property at the market peak in 2022 are hundreds of dollars worse off each month, Compare the Market research found](https://i.dailymail.co.uk/1s/2024/01/09/20/79779115-12941239-Those_who_bought_property_at_the_market_peak_in_2022_are_hundred-a-15_1704831001622.jpg)
Those who bought property at the market peak in 2022 are hundreds of dollars worse off each month, Compare the Market research found
‘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,’ Koch said.
‘Meanwhile, a lot of mature ns have missed this pain altogether after selling their properties at the peak and having reaped the benefits over more equity for years.
‘A lot of mature ns have been shielded from the rate rises, and it’s already widely believed that their spending drove inflation.
‘It’s time policy-makers should be asking: how could the pressure be more evenly spread?’
The research gave an example of a Sydney homebuyer who bought at the average price of $1.12million in February 2022 and locked in a fix rate of 2.2 per cent.
They would be facing minimum monthly repayments as high as $5,637, which is $2,247 a month more than when their rate expires next year.
In contrast, homeowners who bought a home for the median price of about $780,00 in April 2019 on the same fixed rate would have seen their repayments rise only $1,576 – a difference of $671 each month compared to 2022 homebuyers.
Meanwhile, those who bought before the pandemic will also benefit from a rise in their equity as property prices have significantly increased over the past four years.
Koch urged mortgage holders hit with higher repayments to call their banks and explore whether refinancing to a lower-rate loan is possible.
‘We urge people in mortgage pain to reduce the interest on their repayments as much as possible by shopping around for a better deal,’ Koch said.
‘When every dollar counts, 2024 should be the year of the new lender.’
There is currently a 0.85 per cent difference between the highest and lowest rates, according to Compare the Market data.
That means a person with a $750,000 loan could save up to $414 a month by switching to a lower rate.
![A Sydney homebuyer who purchased a home for about $1.12 million in 2022 on a fixed 2.2 per cent rate could face a minimum monthly repayments as high as $5,637](https://i.dailymail.co.uk/1s/2024/01/09/20/79779113-12941239-A_Sydney_homebuyer_who_purchased_a_home_for_about_1_12_million_i-a-16_1704831001906.jpg)
A Sydney homebuyer who purchased a home for about $1.12 million in 2022 on a fixed 2.2 per cent rate could face a minimum monthly repayments as high as $5,637