A baby boomer who paid 18 per cent interest in the late 1980s and went without buying coffee says young people today are entitled for refusing to live in outer suburbs like she did.
Terri Cross, now 75, was a single mum paying off a duplex when interest rates kept on climbing in 1988 and 1989.
‘Horrendous, absolutely horrendous,’ she told SBS’s Insight program.
‘I never went out, I was working but I never went out after work and instead of going and buying a coffee – and it got to that stage – where I couldn’t afford that and I had to take sandwiches to work and I couldn’t go out and get lunch and I’m really not exaggerating.
‘It was really, really, bad, but I got through it, thankfully.’
Ms Cross, who was unable to extend her loan beyond 30 years, said young people today were too focused on wanting to live in nice suburb near the city.
Terri Cross, a baby boomer who paid 18 per cent interest rate in the late 1980s and went without buying coffee, says young people today are too entitled and are refusing to live in a far outer suburb like she did
‘Mine were up to nearly 18 per cent and I couldn’t go extend the loan because I was already on a 30-year mortgage so I just had to cut down as much as I could.
‘I think they’re not prepared, it might sound awful to say that, they’re not prepared to extend and go out further.
‘They want to be in an inner city, which is always going to be hard, and always going to be high.’
Ms Cross suggested Millennials weren’t prepared to move to a far outer suburb like she did.
‘When I first bought my first house, it was right out. I mean right out,’ she said.
‘It was like a country town and I think a lot of people don’t want to be doing that.
‘We never had the computers back then either and the web and all the rest of it.
‘All the Millennials can work at home, that’s what I feel.’
Retired teacher Bruce Jackson bought his first home in Albury, in southern New South Wales, for $60,000 in 1984, admitting he couldn’t have afforded to have bought in Sydney even then.
‘When I bought my house, I was never able to pay rates on time, I was never able to pay the electricity on time, I was always weeks over on electricity getting reminder, after reminder, after reminder, and quite often I’ve had to borrow money off other people to cover that and pay them back as soon as I had anything spare,’ he said.
Mr Jackson said he also didn’t go on holidays and ate minced meat to save money as 43 per cent of pay went towards his mortgage.
‘You’d eat mince every night. And you wouldn’t eat the quality mince. You’d eat the cheap mince,’ he said.
‘I never went on holidays … Never bought a new car.’
Retired teacher Bruce Jackson bought his first home in Albury, in southern New South Wales, for $60,000 in 1984, admitting he couldn’t have afforded to have bought in Sydney
Mr Jackson bought an FB-series Holden when he was 17 and still drives around in that car made in 1960
Mr Jackson bought an old FB-series Holden when he was 17 and still drives around in that car made in 1960, which would now be a collector’s item.
The house he bought for $60,000 almost four decades ago, when interest rates were at 13 per cent, last year sold for $550,000.
Back in 1984, Sydney’s median house price was $85,900 and the average, full-time salary was $19,656.
With a 20 per cent mortgage deposit, that meant the typical, single borrower would have had a debt-to-income ratio of 3.5.
In 2023, Sydney’s median house price is $1.334million and someone with an average, full-time salary of $95,581 would have a dangerous debt-to-income ratio of 11.2 even with a mortgage deposit.
That is well above the Australian Prudential Regulation Authority’s ‘six’ threshold for mortgage stress.
Sydney house prices are so dear a Mount Druitt house, 50km from the city, typically costs $819,589, CoreLogic data for July showed and a borrower on an average salary would be in mortgage stress paying it off.
While interest rates reached 18 per cent in 1989, the Reserve Bank’s existing 11-year high 4.1 per cent cash rate would be almost the equivalent because house prices compared with incomes are so much dearer.
Millennial Xavier George, 30, says boomers are to blame for the issues many millennials face.
‘I think that if we knew what we knew now, then things may have happened differently. But people didn’t buy homes, knowing that it would suddenly become this huge social problem,’ he said.
‘I think people were taking what was good financial advice. You know, you should park your money in homes because it appreciates well. You can rent it out.
‘I think the actions of a part of society are not the same thing as the government who made certain policies and allowed certain things to happen. Who do know better and should have known better. I think they’re two different things.’
Xavier aspires to become a homeowner, and when asked about his expectations for achieving this goal, he offered a straightforward response.
‘I think it’ll take my parents passing away,’ he stated frankly.
He then added with a touch of humor, ‘You know, let’s hope not. Sorry, mum. But that’s the potential financial windfall I’m referring to. I’m serious about it. For many people, inheriting from their parents is the pivotal moment when they can finally afford to purchase their own home.’
Despite taking what he believes are the right steps, the 30-year-old is confronted with the reality that over 30 per cent of his income is dedicated to rent, and he’s simultaneously dealing with the burden of a $100,000 HECS debt.
Baby boomers who went to university between 1974 and 1989 had free education, before Bob Hawke’s Labor government introduced the Higher Education Contribution Scheme.
Freelance photographer Ashley Swallow is struggling to break into the property market
Xavier George, a tenant, believes he has taken all the necessary steps to purchase his first home, but it seems like his efforts haven’t made a difference in achieving that goal. (Image source: Insight/SBS)
‘It’s like, you can do all the right things. You can go to uni and get your degree and you can get the specialist degree, and you can get promotions, and yada, yada. And it kind of just doesn’t matter almost,’ he said.
‘I’m earning more money now on paper than I used to. But I’m definitely not feeling like I earn more money. You know, the cost of life has just grown quicker than my income has.’
Another member of the Millennial generation facing challenges in entering the property, freelance photographer Ashley Swallow, says she is being held back by high house prices.
‘Owning a home, having a family is definitely something (my partner and I) want to do .. but we want a house before we do that,’ she told the program.
‘But it’s one of those things. It’s kind of held back at the moment because of financial situations.
‘I don’t want to be having my first child at 35. I don’t mind if I buy a house at 35. But starting a family would be, ideally, sooner But then everything has to work out to be able to do that.’
***
Read more at DailyMail.co.uk