Younger Borrowers Bear Brunt of Rate Hikes in Australia

Australia's largest mortgage lenders faced scrutiny in a Senate inquiry into intergenerational housing inequity, as evidence mounted that younger borrowers are bearing the brunt of interest rate hikes.

The Reserve Bank of Australia (RBA) deputy governor and chief economist Sarah Hunter told the committee that monetary policy is a blunt tool but remains effective at bringing down inflation, which sat at 3.5% in July.

Hunter noted that Australian households broadly split into three groups, renters, indebted owner-occupiers, and those who own their home outright, and that the 'cash flow channel' through which rate rises are meant to slow the economy falls almost entirely on the middle group.