Monthly mortgage payments jump 105% in ten years

by Mackenzie McCarty12 Apr 2013

Monthly mortgage payments have doubled in the last ten years, according to a new information from research company Canstar.

The Home Loan Star Ratings report, which used ABS data to compare mortgage repayments over the past decade, shows skyrocketing home loan rates are consistently bypassing inflation.

“While the market is currently flat, the past ten years have nevertheless seen a doubling in the cost of monthly mortgage repayments,” says Canstar. “This compares to an average wage increase of 54.5% and an overall inflation rate of just 31.4%. In other words, our mortgage commitments are now taking a higher proportion of our income.”

The report argues that this hasn’t caused an affordability crises, however, due largely to current low interest rates.

“Our standard mortgage interest rates of approximately 6.42% are a great deal lower than the average of 10% that mortgage holders were experiencing in March, 1993. Even that was low compared to rates of over 17% in 1989/90.”

While significant interest rate rises are not expected in the short-term, according to Canstar, some small rises could be on the cards over the medium-term.

“What would be the result [of interest rate increases]? For mortgage holders with a $300,000 mortgage at current standard variable rates, a 2% rise in interest rates would cost an additional $400 per month. This additional cost would not be sustainable for some households.”


  • by Charles Ponzi 14/04/2013 11:25:59 AM

    Interest rates are too low. If interest rates were higher, people could save more for their retirement and have money left to spend on discretionary items. It is very risky for baby boomers to depend on the future sale of their home or investment property to fund their retirement especially when so many baby boomers will be retiring around the same time. Baby boomers had better hope that Australia's real estate property is not in a bubble. Imagine trying to sell your house in a falling market during a recession when many people will be losing their jobs or only working part-time for low wages.

    Higher term deposit interest rates would help young couples saving for their first house. Compound interest can be a young man's best friend. Young couples would actually be able to save a large deposit for a new home and the government wouldn't have to offer first home buyer grants that only raise the price of real estate for everyone. It is amazing how people are thriftier and more careful with money they have actually earned and saved over many years.

    Bankers, however, make more profits and receive bigger bonuses when customer debt levels are high. When debt levels can climb no further, bank profits will crash and the taxpayer will be asked to carry the loss. Private debt will become public debt. Bankers are capitalists during good times but they will have few qualms about socialising bank losses during an economic crisis.

    I wonder what the bankers will be doing with their bonuses this year? My guess is that they won't be keeping it in the bank or in cash. No doubt, they have all bought a fortified castle with armed guards to protect themselves and their gold from the hoards of disgruntled savers whose money will be trapped in bank accounts or made worthless due to hyperinflation as a result of the American, British and Japanese policy of Quantitative Easing (money printing) as part of a global currency war.

    I would like to personally thank all the Australian politicians for their part in encouraging this real estate Ponzi scheme with negative gearing policies, first home buyer grants and for not regulating our banks more closely or from discouraging our banks from being concentrated into ‘the four pillars’ which are now too big to fail.

    I would also like to thank the media who has shamelessly spruiked the virtues of buying real estate to the masses and helped fuel the desire for sexy property investment portfolios. Without our politicians, bankers and the media’s participation for the past ten years in spruiking real estate our monthly mortgage payments never would have jumped 105%!!!

    It would be tempting to blame real estate agents too, but oddly I feel that they were simply at the right place at the right time. After all, when you go the barber he will never tell you it is the wrong time for a haircut—even if you’re bald.

    The blame for huge monthly mortgage payments will unfortunately fall on the victims who bought houses they could not afford. All fingers will point at the debt slave for believing the fairy tale that house prices double every ten years and that if they didn’t buy now they would be shut out of the market forever. The debt slave will be ridiculed and mocked for listening to their baby boomer parents who told them that rent money was dead money. The children of the debt slaves in future years will not be so gullible as to believe that house prices never go down. A whole new generation will come of age seeing only house prices depreciating year after year. Soon we will all be Japanese.

    A man’s house is his castle—but for a debt slave or a bonus rich banker, a castle can turn into his prison.