Increasing Interest Rates

As interest rates threaten to increase it helps to realize that rising rates on amortizing loans affect borrowers in two ways. The first is that as rates rise, total payments increase. The second, and less talked-about, is that as rates rise, total principal paydown is delayed. To depict this I have graphed the percentage of principal paid down after five years of payments alongside the amount of interest paid over those five years:

A borrower will find that, after five years of payments with a higher mortgage rate, not only will they have paid more interest but also they will have paid less towards principal.