In New Zealand, our property mortgage interest rates have consistently sat at around 5-7% for many years. The impact of interest rates on residential property is simple: the lower the rates, the more affordable the property becomes.
Low interest rates allow homeowners to pay off their mortgages more quickly. This is done by keeping repayments the same after locking in low rates when they become due.
These historically low rates let the property market continue to grow or stabilise, compared with rising prices which would put pressure on the property market and consumer confidence.
How does this affect today's market? When interest rates change, it disturbs the security and consistency established when investing in property – impacting both buyers and sellers.
Recent changes on a global and international scale have opened up a space in the property market, creating an opportunity for investors and sellers.
Because of the drastic drop in interest rates, home owners could see lower repayments, and find debt servicing more affordable.
While the recent developments in the market predict a positive impact for residential home owners and investors alike, there are smart ways to go about anticipating and responding to the changes.
With mortgage interest rates at an all time low and wages steadily rising, there seems to be an improvement for house affordability – especially for first home buyers. The government has previously required investors to pay a 40% deposit, but that has now dropped down to 30%.
Lower interest rates mean you have the ability to service more debt and therefore spend more on a residential home. A housing shortage ultimately causes unstable or increasing property prices as interest rates decrease further.
Now appears to be a good time to invest. Given the security around current interest rates, and a low return from bank term deposits, now is a good time to look at investing in property and entering the property market.
If you’re an existing owner of a residential property, it’s important to be aware that the market is rising. The recent changes to interest rates means you’re able to get more equity out of your property for other investments.
Get your property valued. Getting an accurate value for your property is always the first step to establish where you stand in the market. Given the recent changes to interest rates, it’s important to get a current value on your residential home if you’re looking to sell.
Our qualified valuers at TelferYoung can give your residential property an accurate value. Talk to us today.
Posted 7 months ago