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.”