If you are a first home buyer in Sydney you may be wondering what effect a change in interest rate could have on your mortgage. Whilst interest rates are notoriously difficult to forecast, it can be useful to understand what would happen to your payments if rates do change in the future.
We might not be able to definitively say when interest rates will fall or rise, but we can give you an accurate figure as to what a change would do to your monthly mortgage payments. When interest rates rise, the mortgages become dearer, and the extra expense makes the home purchase for a first home buyer in Sydney less affordable. Also, banks tend to have less access to funds to lend to first home buyers in Sydney and the availability of mortgages decreases.
Your mortgage brokers in Sydney can help you better understand the scenario when interest rates increase. The first thing to note is that the last time the RBA’s cash rate target was at 1.25% was June 2019 – so not that long ago.
Modelling from Canstar, published on Domain, shows the average variable mortgage rate would lift from 3.21% to 4.36%, based on the current margin between the two rates.
Now, if you took out a $500,000 loan tomorrow, and the cash rate hit 1.25% in 2024, that modelling estimates your monthly repayments would jump $300 to $2464 per month.
If, for example, the average variable loan rate increased to 7.04% in 2031, where it was just a decade ago in 2011, Canstar estimates that same borrower who took out a $500,000 loan would pay $900 more in monthly repayments than they do now – even after a full decade’s worth of repayments.
If you’re a first home buyer looking for mortgage brokers in Sydney, connect with us today and let us help you calculate your mortgage rate.
