Just as an exercise, I have been getting an idea of how much money I could borrow using some online mortgage calculators. I have checked several of them and it seems I can borrow as much as $572,000 over 30 years (interest rate of 5.75%) on a combined income of just over 80k. Is this actually a true indication of what the banks are lending? Doing some calculations, thats over 50% of net income gone just paying the mortgage.....$3300 a month. My current rental is $2000 a month less than that (defence housing). I doubt I would be able to sustain paying $3300 a month even if mortgages stayed at the rates they are now. I also doubt that many of the recent home buyers will be able to service their massive loans.
Also noticed that each .25% increase in interest rates means I can borrow about 10k less than before the rise. If people can not borrow as much as they did before the interest rate rise, how do prices keep rising?
