With interest rates rising, are real estate investments and other real estate purchases a good way to hedge against inflation? Real estate purchases can help with this for the following reasons. Real estate agents should keep this in mind when using real estate marketing trends to find buyers.
When inflation occurs, housing prices go up as well. This leads to higher home values for property owners. Those who have owned property for a long time have experienced a steep rise in appreciation in recent years. Buying property now means home buyers and investors can expect their properties to appreciate along with inflation.
Fixed Rate Mortgages Don’t Change
Buyers who take out a fixed rate mortgage do not have to worry about having their mortgage payments go up due to inflation and rising interest rates as those with adjustable rate mortgages do. Fixed rate mortgages provide home buyers and investors with peace of mind knowing that their mortgage payments won’t change over the years.
Rents have been increasing significantly in the past couple of years, and they’re expected to continue doing so as inflation occurs. Those who purchase a home won’t need to deal with rising rents in the coming years, making real estate purchases a smart financial decision.
Mortgage Rates and Inflation
How does inflation impact mortgage rates? In the short term, mortgage rates usually are not drastically affected by inflation. However, rates on adjustable rate mortgages could end up rising higher than usual if inflation drags on. Mortgage rates overall have gone up slightly. These rates are still much lower than they have been in the past, though.
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