«

»

Sep 10 2016

Mortgage Payments and Interest Rates


Low Interest Rates Give Low Mortgage Repayments, but for How Long?

With Interest Rates at record lows, many people are scrambling to buy houses, and take advantage of low mortgage repayments, but what happens when rates begin to normalise again?

With todays RBA Cash Rate of just 1.5%, it is possible to borrow money at around 4%. The repayment at that rate may seem reasonable, but, what if that monthly repayment doubles?  How would you cope then?

If your new Mortgage Repayment went from $364 per week, to even the reasonable $505 per week, how would you handle that increase?
That example is a change from 4% to 7%, for a $330,000 mortgage over 30 years.
7% is used, as this is a good example of recent average interest rates. (see bottom of page)

Example repayment rates of a $330,000 mortgage, over 30 years.

A $330,000 mortgage at an interest rate of 3.00% has a repayment rate of $1,391.29 per month, or $321.07 per week
A $330,000 mortgage at an interest rate of 4.00% has a repayment rate of $1,575.47 per month, or $363.57 per week
A $330,000 mortgage at an interest rate of 5.00% has a repayment rate of $1,771.51 per month, or $408.81 per week
A $330,000 mortgage at an interest rate of 6.00% has a repayment rate of $1,978.52 per month, or $456.58 per week
A $330,000 mortgage at an interest rate of 7.00% has a repayment rate of $2,195.50 per month, or $506.65 per week
A $330,000 mortgage at an interest rate of 8.00% has a repayment rate of $2,421.42 per month, or $558.79 per week
A $330,000 mortgage at an interest rate of 9.00% has a repayment rate of $2,655.25 per month, or $612.75 per week
A $330,000 mortgage at an interest rate of 10.00% has a repayment rate of $2,895.99 per month, or $668.31 per week
A $330,000 mortgage at an interest rate of 11.00% has a repayment rate of $3,142.67 per month, or $725.23 per week
A $330,000 mortgage at an interest rate of 12.00% has a repayment rate of $3,394.42 per month, or $783.33 per week

Changes in Mortgage Rates over time can be seen at the RBA, using the F5 Indicator Lending Rates

August 2016 Lending rates; Housing loans; Banks;

5.25% Variable; Standard; Owner-occupier
4.45% Variable; Discounted; Owner-occupier
4.10% 3-year fixed; Owner-occupier

Looking at Recent Historical Interest Rate Changes for a 4 year period:

August 2004

7.05% Variable; Standard; Owner-occupier
6.60% Variable; Discounted; Owner-occupier
6.95% 3-year fixed; Owner-occupier

August 2008

9.60% Variable; Standard; Owner-occupier
8.95% Variable; Discounted; Owner-occupier
8.90% 3-year fixed; Owner-occupier

This shows that the variable rates rose by 36% in Four Years. If we apply that to the current 2016 rates, we could get this in 2020:

August 2020 Lending rates; Housing loans; Banks;

7.14% Variable; Standard; Owner-occupier
6.05% Variable; Discounted; Owner-occupier

Highest Mortgage Interest Rate

The Highest Mortgage Interest Rate period was from June 1989 to Mar 1990, with a standard mortgage rate of 17%

Interest Rates ABOVE 10%

Standard Mortgage Interest Rates were 10% or Over, for the entire period between July 1980 and April 1993. (A period of 154 months, almost 13 years)
And again between December 1994 and May 1996. (A period of 18 months)

Average Interest Rates over 10 year periods

The average Standard Mortgage Interest Rates during the 10 years to August 2016 was 6.91%
The average Standard Mortgage Interest Rates during the 10 years to August 2006 was 7.02%
The average Standard Mortgage Interest Rates during the 10 years to August 1996 was 12.69%
The average Standard Mortgage Interest Rates during the 10 years to August 1986 was 11.29%
The average Standard Mortgage Interest Rates during the 10 years to August 1976 was 7.34%






1 - 45

Win a Luxurious home in Australia with Hometown Prize Draws.

For Books with Free Delivery to Australia, look at: BookDepository UK and USA

Leave a Reply to this Posting, but no links please.