Property Investment – a Long Term Commitment

A new paper, released by the Reserve Bank of Australia, emphasises the fact that the purchase of a home is a long term commitment and that those with home loans must be aware that interest rates will change across the life of their mortgage.
Low interest rates are currently on offer, but because interest rates tend to be cyclic, such low interest rates are not likely in 10 or 20 years’ time.

In the Reserve Bank’s paper, economists note that housing is a ‘superior good’ investment. Household spending is increasing in line with income growth but as no massive increase in the growth of the average household income is predicted in the near future, buyers should also realise that property prices are unlikely to ‘boom’ in this period either.
Because interest rates are low, there has been a definite reduction in the popularity of fixed rate home loans in Australia. In fact, the popularity of fixed rate home loans has fallen by 4.26 %.
The low variable interest rates currently on offer present an excellent opportunity for some people to enter the property market and obtain a home loan which currently offers low interest rates.

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