Interest rates rising, what now?
Many people may not remember the 1990’s when interest rate in Australia reached a peak of 17 per cent.
Today, most home owners and property investors could be paying 4 -5 per cent at the most for their mortgage repayment.
Even with the recent Reserve Bank of Australia (RBA) rate hike and even if all expectations of further rate increases materialise this year, interest rates will not return to their lofty levels 30 years ago.
So, why all the brouhaha about rising interest rates?
In this video, Domenic Nesci, co-founder at Wealthi, provides his insights and put the rate rises into a proper context.
If you want to know the impact of rate increases to your mortgage, or if you want to know the opportunities for property investors in the current property market, this video is a must watch.
It outlines some opportunities and present the real picture in the different segments or tiers in the Australian property market.
Most of all, it identifies some opportunities for property investors as well as home buyers.
As you delve deep into the video, a few things to keep in mind as you try to understand the implications of rising interest rates.
If you look at it from a big picture perspective, you will realise that the rate increases are not all that bad as reported in mainstream media.
In his recent analysis, Peter Esho, co-founder at Wealthi said, “The good news is interest rates are rising because the economy is strong. Unemployment is at record low levels, people have jobs and that is a huge positive.”
It may mean a little bit higher mortgage repayment for some people. But the fact is many Australians have saved up huge amounts of money during the past two years during the lockdowns.
Executives from the big four banks and even economists say that many Australians are well ahead in their mortgage repayments and they have saved up healthy buffers that will give them peace of mind amid interest rate rises.
Another important thing to remember is that as interest rate rises it could mean higher rental income for property owners.
Usually, rate increases are a sign of a growing and healthy economy. It could mean higher wages which means people can afford to pay higher rents.
One of the most important things to consider with rate increases is that it could also mean more affordable properties and investment opportunities as more people look for value rather than emotional buys.
Market shifts in favour of property investors
At Wealthi, we’ve been seeing the market shift from an owner-occupied market to an investor’s market. Investors who have solid jobs and cash saved up can now come into the market and find better deals.
If you would like to discuss the Australian property market in more detail, please reach out to the team to organise a time to have a conversation about how Wealthi can help you build a successful property portfolio.