The cost of high interest rates

Mortgage rates have just gone up to 9.3%, making them amongst the highest in the developed world. They may yet reach 10%.

Six years ago the average floating rate was 6.5%. Now for those without a mortgage, the difference may not be easy to relate to, so here are some statistics.

If you have a $300,000 mortgage, then extra interest compared to six years ago is $161 a week net.

Taking again the $300,000 mortgage, if you are repaying a fixed amount per week of $600, then you will pay your mortgage off in around 16 years at 6.5% interest.

At 9.3% interest, the mortgage will take 25 years to repay. And the extra repayments will come to around $280,000.

So that 2.8% extra interest rate can cost a family with a $300,000 mortgage around $280,000.