The RMIT economics expert says that higher mortgage costs could cost families a child.

Dr Nataliya Ilyushina is a Research Fellow at the College of Business and Law. She points out that added mortgage costs are essentially equivalent to the annual financial responsibility of raising a child. 

"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." Dr Ilyushina says.

Intriguingly, this rise is almost on par with the estimated yearly cost of raising a child in Australia – over $12,823. 

Dr Ilyushina says, "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 with limited income and equity, who usually find themselves early in the mortgage cycle and in the early-to-mid stages of their careers. 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," Dr Ilyushina informs.

This raises critical questions: Does the uncertainty around interest rates, compounded by housing instability, deter or delay people from having children? Are we trading off the short-term policy gain of lowering inflation for the long-term aging population crisis, highlighted in the Intergenerational Report 2023