HLIR014 The relationship between interest rates and housing affordability (573 words)

This article uses a comparison between 2011 and 2020 to determine the effect of falling interest rates on average property prices in Australia. It also takes into account wage changes over that time and what could lead to mortgage stress. It recommends prior advice.

It goes without saying that homebuyers love low interest rates. The lower the interest rate the less the mortgage repayments on a particular house, right?

Well, maybe.

Lower interest rates also mean borrowers can service a bigger loan. In a competitive housing market that can push up prices, as we have witnessed this past decade.

So what’s really going on? Have low interest rates been good or bad for homebuyers?

The numbers crunched...