On a Wednesday morning in Perth, a wartime-era retiree named Ron de Gruchy, eighty-five years old and once a public servant, looked at the Reserve Bank's first rate rise in nearly twelve years and offered the old counsel that the young should tighten their belts. He had carried a mortgage at seventeen per cent in 1990 and remembers leaning on frugality rather than complaint. His remark opened a wider argument about whether each generation's hardship can be fairly weighed against another's, and the readers who answered split along the lines of when they bought, what they could afford, and what
Boomers Versus Millennials: Retiree's 17% Mortgage Memories Ignite Generational Fight Over Rate Rise
At just 5 per cent, today's borrowers would be back at 1980s levels
Mark
Why did one retiree's comment set off so much?
Mimi
Because it put a personal memory against a national decision. Ron de Gruchy paid 17 per cent in 1990 and said people just adjusted. Younger readers heard that as dismissal.
Mark
What were the main objections?
Mimi
Prices versus pay. Commenters said houses now cost far more relative to wages, and Carole Scrimshaw put average loans at roughly $50,000 then and $500,000 now.
Luke
Those are readers' figures, though. The loan sizes and the wage freeze claim come from commenters, not verified data.
Mark
And the paper's own numbers?
Mimi
Repayments took about 24 per cent of gross household income then, and about 19 per cent now at 2.8 per cent. At 5 per cent, today's borrowers would hit 24 per cent again.
Luke
Worth noting those are modelled averages with assumptions: a 10 per cent deposit, a two-income household, a 25-year loan. Real households vary a lot.
Mark
So the comparison is closer than the anger suggests?
Mimi
Right now it's actually lighter today, but the cushion is thin if rates rise.
Luke
And whether rates reach 5 per cent here is unknown. The British and US examples are experts' pointers, not a forecast for Australia.
El Pulso
- An eighty-five-year-old retiree's claim that today's borrowers have it easy ignited a fierce argument on PerthNow's Facebook page.
- Younger readers point to house prices outrunning wages, while older readers recall seventeen per cent loans and single incomes stretched across large families.
- Critics say the comparison ignores free healthcare, cheaper homes and very different household incomes, calling the retiree's reasoning whataboutism.
- Analysis warns that a rate of five per cent would push today's borrowers to the same share of household income seen in the 1980s, and that such a rise could come quickly.
On a Wednesday morning in Perth, a wartime-era retiree named Ron de Gruchy, eighty-five years old and once a public servant, looked at the Reserve Bank's first rate rise in nearly twelve years and offered the old counsel that the young should tighten their belts. He had carried a mortgage at seventeen per cent in 1990 and remembers leaning on frugality rather than complaint. His remark opened a wider argument about whether each generation's hardship can be fairly weighed against another's, and the readers who answered split along the lines of when they bought, what they could afford, and what they believe a fair life requires. The numbers, sifted carefully, suggest that the question is not settled by memory alone but by the rate that comes next.
On the front page of The West Australian, an eighty-five-year-old retiree named Ron de Gruchy greeted the Reserve Bank's first rate rise in nearly twelve years with a shrug. Today's mortgage holders, he said, have it easy compared with what he endured. Comments poured in from millennials, baby boomers and those in between.
Mr de Gruchy, a former public servant, was paying seventeen per cent on his Duncraig home loan in 1990. His family lived frugally: no overseas travel, no nights out, and a pair of leather shoes he wore for years. The high rates were a squeeze, he said, but people adjusted and did not complain.
Younger readers pushed back hard. They argued that a dollar stretched further in past decades, that housing costs have far outstripped wages, and that his generation bought homes cheaply and watched them multiply in value. One reader asked how much of his pay went to the mortgage and what his doctor visits cost. Another noted that the average loan then was about fifty thousand dollars, against roughly half a million today.
Mr de Gruchy had defenders of his own generation. One recalled a mortgage that climbed from ten to seventeen per cent, with no carpet, second-hand furniture, cloth nappies and some weeks with no money left for food. Others listed sacrifices they thought the young could make, from dropping streaming subscriptions to holidaying at home, while a few argued that many young people already spend freely on mansions, large cars and travel.
The paper's numbers show the squeeze has changed shape. Then, a loan on an average home consumed about twenty-four per cent of two-income household earnings; today, at lower rates, it consumes about nineteen per cent. Yet the gap closes quickly. At five per cent, today's borrowers would face the same burden their parents carried in the 1980s, and rate rises abroad suggest that threshold may arrive sooner than anyone hopes.
On the front page of The West Australian on Wednesday, an 85-year-old retiree named Ron de Gruchy took a look at the Reserve Bank's first interest rate rise in nearly 12 years and shrugged. Today's mortgage holders, he said, have it easy compared with what he went through. The page then drew a flood of comments from millennials, baby boomers and people in between.
Mr de Gruchy, a former public servant, was paying 17 per cent on the loan for his Duncraig home in 1990. His family lived frugally, he said. He had been wearing the same pair of leather shoes for 15 years by then, and he still slips into them occasionally. His advice to younger borrowers was to tighten their belts. The high rates were a real squeeze, he said, but you just adjusted. Overseas travel was out of the question, there were no nights out and no trips to the casino, and in his telling people back then did not complain.
Many younger readers pushed back on PerthNow's Facebook page. Glyn MacLean wrote that a dollar went a lot further in the 1980s and '90s. Aileen Meston said housing costs have far outstripped wage rises over the past 32 years, making the comparison ridiculous. Richard Deliu said Mr de Gruchy belonged to a lucky generation that bought houses for next to nothing and watched their value at least triple. Lisa Martin asked how much of his wage went to the mortgage, whether his doctor visits were free, and what petrol and groceries cost relative to his pay.
Carole Scrimshaw said her children had borrowed believing they had a two-year buffer. She put the average loan at about $50,000 when rates were at 17 per cent, against around $500,000 now, with wages frozen for a decade. Lou Mettler called it classic whataboutism, noting that a house bought for $30,000 is now worth $800,000. Elliott Egan said Mr de Gruchy bought when the average house cost less than a year's average salary, not ten times it.
Mr de Gruchy had supporters too, mostly from his own generation. Elise Whittington said her mortgage started at 10 per cent and climbed to 17. With one income, two small children, a dog and cats, she said they had no carpet, patio or driveway, just sand. Furniture and curtains were second-hand, clothes were hand-me-downs, and they used cloth nappies. Sometimes after the mortgage and bills there was no money left for food. Alistair Hunt said he earned $25 a month on a single minimum wage with four kids and still managed repayments, adding that his generation was tougher and had no mobile phones or internet.
Others listed the sacrifices they thought younger borrowers could make. Neil B suggested dropping Netflix, moving to cheaper family phone plans, making coffee at home, skipping takeaway and holidaying at home. Robert M, who lived through the 17 per cent era in a mortgage-belt suburb, said the young families filling local restaurants and bars may have to cut back as he once did. Gregory B said many young people would not tighten their belts, citing five-bedroom mansions, the latest four-wheel drive and holidays in Bali.
The paper also ran the numbers. When rates hit 17 per cent, the average home cost about $80,000 and the average wage was $492 a week. On a $72,000 loan, a 10 per cent deposit over 25 years meant repayments of $1035 a month, or 24 per cent of gross income for a two-income family. Today the average home is about $525,000. A $472,500 loan at 2.8 per cent costs $2191 a month. With average earnings of $1328.90, that is 19 per cent of a two-income family's gross income.
The gap closes fast, though. At just 5 per cent, today's borrowers would be spending 24 per cent of gross household income on the mortgage, the same as in the 1980s. Experts say that could come quickly, pointing to several rate rises in Britain in the past six months. In the US, the rate sat at 3.05 per cent before Christmas and is now 5 per cent.
Citas Notables
The high interest rates were a real squeeze on finances but you just adjusted.— Ron de Gruchy, retiree
We all know the increase in housing has outstripped the increase in income.— Aileen Meston, Facebook commenter
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Economy & Finance