Home loans rates may be starting to rise from their historically low levels, but overall borrowers are paying far less for their loans than before.
Westpac has compared the Effective Mortgage Rate (EMR) against the New Finance rate. The EMR is essentially the average interest rate of the all the home loans currently in the market (billions of dollars worth of loans), while the New finance rate is the average of the current rates on offer in the market.
The graph shows that over the past two years the average rate of all loans (EMR) has been 7.70%, however the current rate is around 6.50% and yet to bottom out at its low. While the New finance rate is starting to creep up its impact on total borrowings is muted.
The key point? Don’t grizzle about rising interest rates. On average everyone is paying far less interest than they have for a long time.
