Topics: Reserve Bank of Australia, RBA, interest rates, cost of living, family planning, financial decisions, budgeting
Dr Nataliya Ilyushina, Research Fellow in the College of Business and Law
“Recent data reveals that since the start of interest rate hikes, repayments on an average $500,000 mortgage have increased by more than $900 a month, translating to over $10,000 annually.
“Intriguingly, this rise is almost on par with the estimated yearly cost of raising a child in Australia – over $12,823.
“Could it be that the added mortgage costs are essentially equivalent to the financial responsibility of having a child?
“Add to this, the fact that the arrival of a child often prompts parents to scale back working hours, sometimes to part-time employment. While these individuals still count as "employed" in ABS data – working at least one hour per week – the reality is a decrease in household income.
“This brings us to young parents, who usually find themselves early in the mortgage cycle and in the early-to-mid stages of their careers, with limited income and equity. Elevated interest rates, much higher than just two years ago, could swiftly lead them into mortgage distress.
“The 25–34 age group is already the most vulnerable to such financial strain.
“Research consistently shows that homeownership and household size significantly impact fertility decisions. Most people seek stable housing situations before choosing to expand their families.
“This raises critical questions: Does the uncertainty around interest rates, compounded by housing instability, deter or delay young families from having children? Are we trading off short-term policy gain of lowering inflation for the long-term aging population crisis, which was just highlighted in the Intergenerational Report 2023?”
Dr Nataliya Ilyushina is a Research Fellow at the Blockchain Innovation Hub and ARC Centre of Excellence for Automated Decision-Making and Society (ADM+S) at RMIT University. Her work investigates decentralised autonomous organisations and automated decision-making, and the impact they have on labour markets, skills and long-term staff wellbeing.
Media enquiries: RMIT External Affairs and Media, 0439 704 077 or news@rmit.edu.au
.jpg)
