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Buying a Home When Interest Rates Rise: Advice From the Experts

Buying a Home When Interest Rates Rise Advice From the Experts - Buying a Home When Interest Rates Rise: Advice From the Experts

With the Euribor in positive for the first time in six years and a foreseeable increase in interest rates, doubts arise among those looking for a house. The big question is whether to advance the purchase or wait until we see the evolution of the markets. We have compiled some answers that specialists offer and that help to decide if buying a house when interest rates rise is viable or not.

Is it advisable to delay the purchase?

When the economic situation points to a rise in interest rates, experts advise not to abandon the idea of ​​buying. That rise will inevitably occur in a change of cycle in the economy.

They add two more circumstances those who value buying a home when interest rates rise shall consider. Firstly, investors will be more cautious and slow down real estate purchases. Secondly, there will be a part of potential buyers who will not be able to face the mortgage payment.

The result will be an increase in housing stock and less competition when buying. In other words, there will be greater possibilities for negotiating prices with housing sellers.

Therefore, contemplating these circumstances and the foreseeable increase in rental prices, we shouldn't abandon the idea of ​​buying a home when interest rates rise.

When would it be worth it to buy a home when interest rates rise?

Beyond the evolution of interest rates, experts indicate that personal circumstances and individual financial health are essential in the final decision. We should know our debt capacity, calculate our budget, the mortgage we could assume and if the bank will approve it.

If these issues are not an inconvenience, and we have job and family stability, there would be no reason to abandon the idea of ​​buying a home. To measure this stability, apart from knowing if we could afford the initial expenses and the mortgage payment, we should consider if we'll keep our current job for the next three years. Despite the labour market has changed a lot in recent decades, and job rotation has grown so much, this measure intends to determine if we have a stable job or if, on the contrary, our current situation is temporary and therefore riskier in the face of interest rates rises.

Which is better: fixed or variable interest?

When circumstances point to a rise in interest rates, the logical option, according to specialists, is to opt for a fixed interest rate that avoids these possible increases. They are higher than those of variable mortgages, but with interest rates still at low levels, it is a good opportunity.

It is also convenient to compare the products of different banking entities, the expenses derived from the formalization of the mortgage or the possibility of redeeming part of the mortgage.

Furthermore, we should study whether it is worth subrogating the seller's mortgage. If he got the mortgage with better conditions, it may be an option. However, we recommend analyzing the clauses of the property loan carefully.

In short, is it a good time to invest in housing?

When it comes to investing, it may be a good time. The reason is the increase in rental prices. Nevertheless, experts advise not to rush into a purchase and evaluate all the options so as not to end up paying a higher price than the market.

Finally, if you decide to look for housing, helps you find it. Just enter your preferences in the browser and start your search.

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