a)The fully amortising home loan Bob and Jill were discussing was for 80% of a $1 mil house, at 4% interest p.a., paid monthly over 30 years. The monthly payments were solved as $3,819.32.

Jill chimes in ...

"After 5 years, I may consider making some changes to the terms of the loan. What is the mortgage balance remaining?"

b)Jill continues ...

" Now that we know the balance after 5 years, I'm concerned that interest rates may go up by then as our fixed rate of 4% after 5 years. Oh sorry, didn't I mention our interest rate was fixed for 5 years? Sorry, my bad.

I was watching ABC news last night and they said the RBA may push up rates by 50 basis points. I don't know what that means. How much will I need to repay every month if that happens after fixed rate term expires? "

Hint: You may assume that the banks will pass on the full increase in cost of funds from the RBA to their customer loans.

When you enter in the loan PV, enter it in as a -tive to satisfy the calculator convention.

Enter your answer without $ and to 2 decimal places

Answer: