If you believe the media, interest rates are HIGH AND RISING FAST! Despite this, the fact remains that prior to the pandemic, interest rates were already at an historic 50-year low. So how can they be high? The point is, the media loves to sell doom and gloom with the “experts” predicting property plunges and mortgage stress left right and centre.
Whilst it may be true for a couple who have taken on a $1,200,000 mortgage recently (at a ridiculously low rate of 1.99%) and are now facing a new reality, most buyers and even investors do not have a mortgage that large…a lot of our potential buyers are finding that whilst they are paying over $630 per week in rent, they can still buy into the market for less than $550 per week even with these “higher rates”
We also know that many buyers that they are under serious “rent stress”. Rental shortages here in WA are at a crises point, with our vacancy rates at all-time lows of below 1%. Landlords know this, and are taking advantage of the lack of stock. They can increase the rent on their tenants knowing people are willing to pay more just to stay in essential accommodation for them and their family.
We also know that a landlord (if the property is mortgaged) is faced with higher interest rates, they will certainly pass on their higher cost of borrowing to the tenant, looking to retain their net yield. So what would you rather, it cost slightly more than you were expecting to pay for your own home, or be at the mercy of your landlord increasing your rent? The choice is yours!
Remember we are not financial advisers, and these views are merely our own. Feel free to do your own research but as we always say – why rent when you can own for a similar price in rent? It's a no brainer!
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