Mortgages in Australia are huge. Anyone who bought a house at the tail-end of the property boom with a 90% plus mortgage may already own a house that is worth less than their mortgage. Mortgage rates are currently low, and are tipped to go up – and this together with the shaky property market and the NSW investment property double-dip tax threaten to really shake up the market.
I bought my house in September last year and finalised my mortgage in October. I did not fix my mortgage rates – I opted to take the gamble and go for variable mortgage rates as the fixed mortgage rates were already fairly high. We came in at the tail end, like a lot of other buyers. The best move we made is we bought a fixer-upper. The reason this is good is that we can add value easily, with (hopefully) minimal investment. This means that while the mortgage value stays relatively constant (short term) and property decreases slowly (hopefully only slowly) we can compensate to a degree by improving the house.
I did some rough calculations on mortgages in Sydney and Australia, out of interest. If you took the Average house value in sydney as $560,000 and the buyer took out a mortgage on the house of 80% that would mean his mortgage would be about $448,000. If his mortgage interest rate averages 7.5% over the life of the mortgae, and the mortgage runs for 25 years, the buyer would pay mortgage interest totalling about $545,200. That means he’s effectively paid over $1.1 million for his house excluding other mortgage fees, stamp duties, etc.
If property over the same time stays of about the same value (assuming a property crash and recovery) it means that the homeowner is paying about an extra $450,000. Now consider someone who rents for the same time period, starting at $300 / wk rent, scaling by an average inflation of 2% a year, the renter would pay about $499,500 in rent – which is all lost, like bank interest. Added to that would be the cost of moving every five years or so, say an extra five grand. Rounded optimistically in the renter’s favour, he pays about $500,000 rent in 25 years (squaring off other costs against the costs of owning a house 
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The difference between the mortgage repayments and the rent over the whole 25 years comes to about $493,000 which means that the asset value of the house would still mean that the homeowner has come out ahead.
I know this is grossly simplified but it does make the point: If you are going to buy a house, shop around, time it carefully, but do it as soon as you are ready. The other great point is this: Pay more back on your mortgage than you have to. Do whatever you can to reduce the interest you pay. The cost of the house and the fluctuations in the property market don’t screw a homeowner half as badly as mortgages do. Mortgage interest is the killer.