Why Interest Rates May Rise Further But May Not Be a Cause for Concern
Interest rates on home loans have gone up rather quickly in the recent past. In the past, high rates have also been seen on a downward trajectory. It is the nature of the beast – market forces, inflation, government policy, events such as the pandemic – all of these things impact rates. I had predicted that inflation is coming and higher rates were only to be expected. Given that interest rates tend to rise and fall, should you wait to invest? Is it wise to wait for interest rates to fall before investing in real estate?
Interest rates are up but so is a lot else.
With inflation currently being in the region of 8.5% loan rates have gone up to around 5% for homeowners and about 6% for investors. When the cost of living goes up, so do rents. So, landlords aren't really missing out – their investments are fetching rents that are commensurate with the cost of living; give or take. And even though rents are going up, they are still low in my view.
To get back to the issue at hand: are interest rates going to fall? If so, should you wait to invest? Taking all the factors into consideration, if I were to make an educated guess, I would say that rates may go up further in the short term. They may go up to 7% or 8% in times to come. Of course, they could fall, but chances of this happening are lower.
Why you shouldn’t wait to invest.
To be clear, I cannot predict the future. If I could, I would be the richest person on Earth, and the likes of Elon Musk, Jeff Bezos, and Bill Gates would have been asking me for advice and maybe even a loan! Though I cannot predict the future, I can offer you insight based on my past experiences. In the 80s or thereabouts there were times when interest rates were really, really high – 10%, 12%, and even 14% at one point. So, the slightly higher interest rates that we are seeing now ought not to be a deterrent for your plans to invest.
I'm going to be talking about rising interest rates, the best regions to invest, long-term investment outlooks and more in our upcoming quarterly expo. You are free to join in and experience our online investment event – all the details are available at our website. You can also reach us at info@wordpress-477489-3816299.cloudwaysapps.com about any questions you may have or if you wish to schedule a consultation.