Are home loan interest rates really low?
Lowest home loan rates in 50 years … “Lowest home loan rates in 50 years” scream the headlines. Best time to borrow and buy property claim the real estate agents. With an increased home savings grant for first home buyers, it’s easy to believe that there will never be a better time for existing renters to stop paying “dead money” and buy their own home. And many baby boomers, who created a lot of their wealth by jumping into the residential market in the 1970’s and early 1980’s, are probably now encouraging their children to take the plunge because it worked well for them. But while home loan interest rates are “low”, the question that should be asked is “Are they “cheap”?” Home loan interest rates are low but not cheap … With regard to whether interest rates are historically low, the red line on the chart below of the standard bank variable home mortgage rate since 1970 certainly supports that claim. As at March 2009 the rate was lower than it had been at any time since September
