A north Queensland economist says younger generations have become ambivalent about interest rates, which could see more people placed under financial strain as they rise.
The Reserve Bank yesterday lifted interest rates by 0.25 of a percentage point, bringing the cash rate to 4.25 per cent.
Economist Carey Ramm expects interest rates will increase to about 5 per cent by the end of the year and investors need to be mindful.
“I think people have become desensitised to interest rates,” he said.
“There are a couple of generations out there that aren’t aware that interest rates … back in the ’90s were up in the 19 and 20 per cents.
“I mean people today think nothing of borrowing half-a-million dollars as opposed to … 10 years ago … and unfortunately it means that they’re more susceptible to these small increases in interest rates.”