New research reveals that a predicted cash rate rise in May could devastate travel plans for 64% of Gen Z, who are already making purely price-driven holiday decisions based on destination affordability and flight costs.

For someone budgeting $7,500 for a two-week European holiday, the additional mortgage costs from a 0.25% rate increase would consume 23% of their travel fund, $1,750 annually. With July and August seeing travel volumes to Europe surge 3.8 times higher than the slow period from February to April, the timing couldn't be worse for younger Australians planning traditional winter escapes.

The timing couldn't be worse. July and August are peak months for European travel, with volume 3.8 times higher than the slow period from February to April. However, with a potential May rate rise looming, these traditional winter escapes may become unaffordable for mortgage-holding millennials and Gen Z travellers.

The nationally representative survey of more than 1,000 Australians exposes a generation already stretched thin, with 40% of Gen Z travellers going over budget on their last overseas holiday. More telling, 63% of Gen Z are making purely price-driven holiday decisions, choosing destinations based on affordability (33%) or flight prices (30%).

By contrast, Baby Boomers, with higher rates of home ownership and lower mortgage exposure, show markedly different priorities. Just 44% of Boomers make price-driven destination decisions, compared to Gen Z's 63%, with Boomers instead prioritising experiences like specific sights and landmarks (36%).

For the average Australian with a $700,000 mortgage, a 0.25% rate increase translates to an additional $1,750 annually in repayments. With the May cash rate decision looming and peak European travel season just weeks away, younger Australians may need to recalibrate their winter holiday expectations.