You must have seen people spending too much energy in thinking about property prices and interest rates. Especially, first-time buyers are more worried about it.
Sometimes, they get so confused that they just drop the idea of buying a home.
Is it a right way? Should we bother about things that are not in our control at all?
Well, as far as property experts are concerned, they just discard it. According to them, one can get benefited by property investment regardless of the interest rates going upward or downward.
It is just part of the natural order of things, and one shouldn’t pay much attention to it. Want to know the reasons behind it? Here they are!
Reason#1: Property prices always consolidate, stagnate and fluctuate
You delve the property index of last 100 years; you will find that the property rates are always moving. They go up, come down, become stagnate and even crash.
It happens because of the economic changes happening in the micro and macroeconomic environment.
Some of these aspects are within the control, and some are completely beyond control. Even the most seasoned property investment expert can also not predict it.
What to do then? Should one get the fingers burnt by investing in properties? Experts say that one should ignore everything and remain focused on the investment. They call it ‘background noise’ which should be filtered when looking at the big picture.
There will be small bumps and potholes in the journey, but the focus should be on the finishing point.
Reason#2: Interest rates can’t remain insulated from the market dynamics
Like prices go high, inflation reaches the rooftop and the share market index goes high; interest rates will also go up. It is quite natural.
And they do not rise always. You see a steep downfall in the interest rates also; when the economy crashes.
When you have invested in the property market, you need to be mentally (and financially as well) ready for it.
Keep the contingency plan ready so that you do not get disturbed by the ups and downs.
Reason#3 : How to get rid of worries and tensions?
The best thing is to hope for the best and get ready for the worst. To counter the worst-case scenario, one has to follow the principle of averaging of mortgage cost.
Thus, when the increased interest rates cause the majority of the investors to meltdown, you get saved.
And if the things do not turn out to be the worst, then it is a time for celebration for you.
Reason#4: It is not an emotional game
Investment should not be done based on the emotional triggers. It is a serious business. Don’t get afraid of falling property rates or rising rate of interest.
Check the market parameters and invest in the best property. Parameters that are beyond control should be factored.
It is a long-term game where small jerks get equalized. Hence, there is no sense in making a hue and cry about the rise in the interest rates.