Life now tougher for borrowers than 17pc interest days, analysis finds

Households are facing tougher conditions than during the late 1980s and 1990s when it comes to home loan interest, a KPMG economist says. (ABC News: Declan Bowring)

New economic analysis has found that, over the past two years, Australian households have faced tougher conditions than they did when the RBA's cash rate reached 17.5 per cent in 1989.

KPMG senior economist Terry Rawnsley said gen X households faced the toughest interest rate burden during the global financial crisis.

If the RBA hiked the cash rate again, it would see interest repayments head towards 6 per cent of household income, Mr Rawnsley estimated.

The double-digit rates on home loans in Australia in the late 1980s and early 90s are often held aloft as the ultimate experience of extreme financial pain.

But KPMG senior economist Terry Rawnsley has found that, over the past two years, Australian households have faced tougher conditions than they did when the Reserve Bank's cash rate reached 17.5 per cent in 1989.

His analysis of Australian Bureau of Statistics (ABS) data on home loans, personal loans and credit card interest payments over the past 40 years reveals that households have recently faced one of the heaviest interest rate burdens on record.

Economic analysis by KPMG finds that gen X carried the heaviest interest burden. (ABC News: Fletcher Yeung)

After comparing interest payments to incomes as an average across all households, not just households with home loans, he said things were worse now than they were almost four decades ago.

"The 17-18 per cent interest rate period of the late 80s and early 90s is often cited as the historical peak for home loan stress," Mr Rawnsley said.

Moreover, a heavy burden also fell on gen-X households during the global financial crisis, he found.

According to Mr Rawnsley, total interest payments on debt hit a historical low of 2.6 per cent of household income in the March quarter of 2022.

If you've been wondering how and why Australian house prices spun out of control you're not alone. One filmmaker was so depressed by it he went out and shot a documentary.

But they hit a recent peak of 5.9 per cent in the December quarter of 2023 and averaged 5.8 per cent between September 2023 and March 2025.

That cycle occurred when the RBA aggressively hiked the cash rate target from 0.1 per cent to 4.35 per cent.

In contrast, during the 1989-90 inflation spike, total interest payments peaked at 5.7 per cent of household income in the March quarter of 1990 and averaged 5.6 per cent between September 1989 and June 1990.

But according to Mr Rawn