Hi i need some guideline and opinion on the relation of the property price on interest rate.
what happens to property price when interest rate fall? and what happen when interest rate rise?
milen007
As a ‘gross generalisation’ when interest rates fall (as they have in the last few years) it makes property more affordable. It has also helped to fuel this boom with people buying more expensive houses than perhaps they should have (purely because of low interest rates making payments less), and combined with the FHOG, a lot more people have taken the opportunity to get into the market.
Conversely, as rates rise, the above people who borrowed more will find it difficult to meet their increased mortgage payments. There will be less people out there buying as now they can’t ‘afford it’. There is also a fairly large chance (depending on the level of over extension, and interest rate increase) that there may be a few who default, and sell themselves, or the banks will help them (ie repossess) at a price that is less than what it would have got if they had time to sell, or if the market was strong.
As I said, gross generalisation. There are many other factors that come into the property market.
Cheers
Melthanks mel i got the idea. so people suggested that the property price may fall or remain as the interest rate are predicted to fall since AUD is so strong that may caused inflation?
so how we find the property thats going to default? contact the lending institute?
You can find mortgage defaulters, but it’s a pretty cruel thing to do. There are so many properties on the market these days that you can find *very* cheap property still without preying on other people’s misery.
You still have to sleep at night. Looking for mortgagee sales is like hoping your neighbour’s business will go broke so you can buy it for cheap.
kay
You can find mortgage defaulters, but it’s a pretty cruel thing to do. There are so many properties on the market these days that you can find *very* cheap property still without preying on other people’s misery.You still have to sleep at night. Looking for mortgagee sales is like hoping your neighbour’s business will go broke so you can buy it for cheap.
kay
I go a lot here with what Robert Kiyosaki says. You didn’t cause them to default. If you can find them before the bank takes the house back, and look for a win/win, you may be able to help them save their credit rating. I think in aust though it’s a heck of a lot harder to find these people as our privacy laws are a lot tougher than the US.
Once the people have defaulted, the banks here have to sell the property at ‘market’ anyway, so there is no huge chance of really making a killing.
Cheers
MelKay, really now, you are looking at things from the wrong angle.
As Mel said, ‘you didn’t cause the defaulter to default’.
It may be a sad story but if the property is going to be sold anyway what’s the difference.
You coming on the scene is good for at least a couple of reasons :
1. If you happen to finish up buying the property (be it at auction or by private treaty) it means that your bid or offer is higher than the underbidder’s bid so it is ultimately to the defaulter’s advantage to have you competing with other buyers as this will produce a higher selling price.
2. The second point is even more important than any other consideration.
The defaulter actually losing his house and possibly losing some money on it is not anywhere as important as the defaulter possibly being able to avoid getting a(nother) bad mark against his name.
If the situation is absolutely hopeless the defaulter is infinitely better off selling early enough so as to avoid the lender taking action against him/her in the court (and, in the process, even possibly bankrupting the defaulter).
Cheers,
Pisces133
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