There has been an increase in first home buyers trying to take advantage of the plunge in housing prices, low mortgage effected by the low interest rates and most particularly, the Federal government’s first home buyer grant of $21,000 or $14,000 for a newly built or a pre-owned house respectively.
Financial analysts however are having reservations on the trend. They are saying that the trend may create another problem of its own, in addition to the world economic downturn.
Over valuation of properties in the US and UK made house owner owed more from the banks than what their properties cost at this economic times resulting to losing the investment of a lifetime.
The low mortgage rates make buying a home rather than renting very tempting. Looking beyond the recession however, when rates started to rise, will these new home owners still be able to sustain the amortization of their loans? Only time will tell.
As analysts say, if you plan to stay in your house for more than 7 years, then buy a home else renting will be a better option.
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