Interest rates have a major impact on your property investment portfolio and were recently at 50-year lows as you can see below. This creates a tremendous opportunity for investors but should also be considered a chance to prepare. What goes up must come down and what comes down, must eventually go up again.

 

  Here’s how interest rates affect your property investment:

It is thus critical to build up reserves when interest rates are low and not spread yourself too thin. You can even refinance your properties and keep that capital in your access bonds as reserves.

 Most economists expect interest rates to rise as the global economies are trying to get inflation under control. It is important that you are prepared for it.

 So, then the question remains, should you fix your interest rates during this time? Remember, when you fix your interest rate, it is at a higher rate than the current variable interest rate, so if interest rates don’t increase, you end up paying much more. It is also good to remember that you are competing against some clever banking analysts…

 The benefits of a fixed interest rate are certainty and protection against interest rate hikes. It’s like getting insured against future interest rate increases. But it comes at a price (and sometimes a hefty one). So, ask yourself if it is worth the price.

Source: Jaco Grobbelaar, Managing Director Prosperity Enterprises 

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