The low cost of borrowing money combined with a few other forces have really pushed up housing prices around here lately, and people keep telling me that “oh but your place has gone up in value, it all works out!”
I knew in my bones it wasn’t right, but I did some quick math.
| Mortgage | Townhouse Value | House Cost | Mortgage Increase | |
|---|---|---|---|---|
| 2019 | $250,000.00 | $320,000.00 | $480,000.00 | $160,000.00 |
| 2022 | $250,000.00 | $450,000.00 | $680,000.00 | $230,000.00 |
| Increase | 140.63% | 141.67% | 143.75% |
This is based on similar houses in similar locations, as I’ve been looking for some time.
I now have to get a mortgage ~1.4x the size, for the same place. I know my income hasn’t increased to 143% of what it was in 2019, so that makes it less affordable in the short term, and with the interest rates only going up, that makes it much, MUCH worse. My mortgage is fixed at 2.040% until January 2023, so it’ll be interesting to see what it’s like when that comes around.
The fixed rates at my bank are currently as follows - I use them as a reference because that’s what the bank predicts them to be in the future:
| Home Loans | Interest Rate |
|---|---|
| 1 Year Fixed | 4.69% |
| 2 Year Fixed | 5.09% |
| 3 Year Fixed | 5.79% |
| 4 Year Fixed | 6.04% |
| 5 Year Fixed | 6.24% |
So… that’s a hefty increase coming down the line! I look forward to this (hopefully) pushing the local house prices down, as I’d been in the market to move from my townhouse to something with a workshop when I changed jobs in 2021, and put it on hold while starting in the new position. 🤨