Property Investing FEAR BUSTER #8: Interest Rates Might Go Up The eighth and final in our series on busting the fears that stop people from investing in property is interest rates rising.
“I can’t invest in property. If I do, the interest rates might go up!”
If you are holding off on starting your property portfolio in case interest rates rise, here’s what you should know:
Interest Rates WILL Rise… Eventually
Although we’ve mostly seen decreases to the interest rate over the last few years, currently sitting at a record low 1.5%, as economic growth gradually increases, we can expect inflation (and therefore interest rates) to also increase gradually in the coming years. It won’t, however, have much to do with whether you personally buy an investment property, or not.
But So Will Rents
Because interest rates are set independently to help keep Australia’s inflation rate steady, if interest rates are going up, it means that other things are too, like rents (which will cover your increasing costs) and wages. Also, if more people are renting (due to being unable to afford the increased interest rate), this will put further demand on the rental market, driving up rents.
A Buffer Goes a Long Way
Don’t leave yourself exposed! Always have a cash buffer ready to go to cover yourself in case interest rates rise. While your fellow-investors who are unprepared may be forced to sell, you can hold onto your property and ride out the wave as the market adjusts. It’s not about buying property, it’s about buying time.
In our other blogs, we go into a lot more detail about how the interest rates are set and how the system works, which is both fascinating and important knowledge that will help you set aside your fears as an investor.
Yes, they will rise… eventually. But it doesn’t have to stop you from investing. And it won’t prevent you from succeeding!
Daimien Patterson is the CEO of Integrity Investment Properties, a property investment company based in Australia. He regularly produces books, blogs, and videos on the topic of property investing. Head to [integrityinvestmentproperties.com.au] for your free copy of Daimien’s book, Safe as Houses. The post Property Investing FEAR BUSTER #8: Interest Rates Might Go Up appeared first on Integrity Property Investment.
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