How To Survive Rising Interest Rates

Interest rates, FINLOANS
Interest rates are an important factor in your decision to buy a home, but you have other factors to consider as well. There are many variables that can affect whether you purchase a home, including interest rate and vacancy rates of nearby homes. Either way, it is important to understand how interest rate affects the value of your property.

Armed with a little knowledge, you’ll be able to make an informed decision when it comes time to refinance, investing or apply for a new loan. And whether you’re shopping for a mortgage or just want a better handle on how your bank account is affected by changes in the economic outlook, learning about interest rates will help you perform as an empowered consumer and sophisticated investor.

Are You Playing With Fire In The Current Real Estate Market?

While shopping for a mortgage, you’ve likely heard from your lender or broker to consider the interest rate. It’s easy to understand why: Interest rates are one of the biggest factors in what you’ll pay for a loan. A good rate can save you thousands of dollars over the life of a 15-year mortgage. But where do interest rates come from? How are they affected by other market factors? What should you be looking out for if you’re shopping for a mortgage?

The short answer is that interest rates are set by the Federal Reserve, which means they’re largely determined by their members’ expectations of inflation and growth in the economy. When the economy is doing well, investors expect higher returns on their investments and demand higher interest rates. When things aren’t going so well—like during recessions or periods of low inflation—investors are more willing to accept lower returns on their investments, so interest rates fall. Plus, in hindsight, if buyers anticipate that house prices will decline, they may delay purchasing and selling, leading the property market to collapse faster than expected. People who wait patiently to get their foot in the property market door may reap the benefits of low house costs, thus as the saying goes “patience is a virtue”.

So How Does This Affect Your Mortgage?

Well, if you take out a mortgage when interest rates are high, then your monthly payments might be higher than if you’d gotten that same loan during an economic downturn when rates were lower (remember: those lower rates mean lower monthly payments).

According to this Federal Reserve, the era of rising interest rates is very likely upon us. With interest rate projections looking like it will fall between 1.5% to upwards of 2.5%. That being said, there may be a gap of opportunity in the market, making no better time to look into purchasing a property. Whilst the cost of borrowing may increase, many property owners are looking to offload their excess properties as they can’t afford the interest rates. In fact, Commonwealth Australia and ANZ alike predicts that housing prices will fall after a small rise with a predicted price drop of between 5%-10%. So right now, your last, best opportunity, is to get your personal financial and investment plan in place to handle a higher-rate environment. So get started now, and give yourself a decent chance of making it through these rising rates successfully.

How Can FINLOANS Help?

Investing may appear to be a mysterious, frightening, and frequently hard endeavor to grasp in this extraordinary era of market uncertainty and upheaval, but it is actually a very basic notion. FINLOANS may even reduce the complexities of finance, making it simple to accomplish your property dreams. If you’re considering buying a home, contact our experienced team to go through your possibilities.

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