I speak to many investors daily and it’s interesting to hear their different views on interest rate rises.
First-time investors tell me they're going to "wait and see" and they end up doing nothing, which is very different from the more knowledgeable investor.
These more experienced, savvy investors look at the bigger picture and see that interest rate rises - if accompanied by rental rises - are actually a good thing.
First of all, rises in interest rates can scare away some buyers. This then makes it much easier for investors to get into the property market as there is less demand from owner-occupiers, first-time buyers and novice investors.
Also, the rate rises we're seeing now are actually very small, especially when we remember that rates have fallen 1.9% over the last 6 years.
Yes, it's predicted to get back to levels it was 5-6 years ago, however, in that period, rents have increased a whopping 25-45% depending on where you are. So if interest rates do go up by 2% or so, investors will still be better off.
So to those of you who are sitting back to see what’s going to happen, in that time you could have arranged a fixed-rate mortgage and bought a property that will guarantee you 5% rental return adding to that potential growth.
Nicola McDougall, the chair of the Property Investment Professionals of Australia said it well:
"While the RBA tends to cut rates very quickly when the economy slumps ... it tends to lift rates extremely slowly".
Here's a good article if you'd like to read more: https://www.domain.com.au/news/why-rising-interest-rates-are-good-news-for-property-investors-1135584/