Home buyers today are paying more for their homes, but are paying less interest on their mortgage compared to borrowers over two decades ago.

According to Place West director Simon Wheelans, it is cheaper to pay off a home now compared to the rates borrowers were paying in 1991.

A borrower taking out a loan of 80% of the cost of the average house in 1991 had to pay an interest rate of 18%. Fast-forward to today and the annual interest rate on the average house is pegged only at 3.85%.

Data from the latest HIA Economics Research Note showed that home affordability is much more favourable now in almost all Australian cities compared to the last 15 years.

In Adelaide, Perth, Hobart, and Brisbane, the mortgage rate is more affordable than its 20-year average. This is partly because, in Brisbane, home prices have increased only by 18.6%, lower than the average 40% surge elsewhere in Australia. Both Sydney and Melbourne exceeded the average as they posted a 65.7% and 45.2% house price growth.

The HIA Economics explained that the Reserve Bank of Australia’s official cash rate of 1.5% in August 2016 is only one-quarter of the 6% rate in August 2006, and even smaller than the 7% cash rate in August 1996.

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan