Australian property investments account for 27.5% of investment shares, leading bank deposits and shares according to a recent survey by Westpac. The current financial situation for property has been conducive for investors, with record low interest rates offsetting the increasing property values. There have been several skeptics indicating that this balance will not continue, and will eventually cause a property bubble.
Assuming that the interest rates increase, monthly mortgage payments will shoot up to 15%, but as these rates increase, property values should declined by 13%. Sounds fair enough, but what happens within that shift is what’s concerning financial advisers. A fairly priced property will be an unaffordable with the predicted high interest rates.
These predictions are not meant to scare investors away. Knowing that this situation is a possibility will encourage individuals to straighten out their finances and existing loans to avoid setbacks IF interest rates increase. A carefully laid out financial plan with a certified financial adviser will help sort out any crease in your finances and will ensure that your investment is protected.
Read more about this on the Herald Sun website.