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WTR!!??.. What the Rate!?

WTR!!??.. What the Rate!?

date: None

Interest rates have been around 3% since 1990 and prior to that they were an average of 16% (or more in some cases) So, what’s the comparison, is it harder to buy a home in our area now than historically? 

In 1989, the average home cost was $64,000 & the average income was about $19,000 per year and the average mortgage was about $42,000. Borrowing was about 3-4 times the borrowers’ annual

In 2022, the average home costs $780,000 & the average income is $90,800 per year and the
average mortgage is $710,000. Borrowing is about 10 times the borrowers’ annual wage.

In looking at these basic elements it’s obvious to see that the main difference is that the amount of
the deposit for the increased value of property. Because property prices have increased so much a
standard 10-20% deposit is 78% of an average income in 2022 compared to an average of 48% of the
average income in 1989 for a deposit on a home loan. So there’s the basic equations.

In taking this into consideration, we consider that the average interest rate was 16% in 1989 so
what’s that look like?... $580 per month which is about 2 weeks wages for the time. Compared to
now which is $3,377 per month which is also about 2 weeks wages for the average income now.

Now we’ve established how we look compared to history, what’s the future look like now there’s the
first interest rate rise effected and more predicted?

Well, thanks to the pandemic people are further ahead on their mortgages/ loans than we’ve seen