There is no shortage of people with views on the real estate market! When it comes to purchasing your first house and signing up for your first mortgage when is the “right” time. Realistically the cosmos will never completely align, so you will always have one or more reasons not to buy!

Affordability is clearly one of the main issues influencing those purchasing their first what is viagra property. In recent times interest rates have taken a massive fall, falling from rates of more than 9 precent to less than 6 percent in under a year. Consequently house prices have also fallen between 10 to 15 percent in the present market, all in all meaning that buyers joining the market now will have Cialis mortgage repayments around 30 percent lower than if they bought the same home two years earlier.

However, in recent times interest rates have begun to increase and more recently there are rumours of house prices evening out. Property activity is up 40% on last year (though off a low base) and first time buyers are finding greater competition out there on entry level properties.

Housing experts are still declaring it to be a buyer’s market, and estimate that it will remain so for some time. They also suggest that first time buyers will continue to struggle to locate the right home at an affordable price. One thing for sure in the current housing market is that no first home buyer will find themselves a good buy if they sit on their thumbs for too long. Being proactive in the market, making appointments to check out open homes and making yourself available to good real estate agents is the only way to get the ball rolling. And as soon as you find a good property option, you need to be open to negotiation. Be bold, make an offer, and get yourself in the game, because you never know how much a current owner may be willing to negotiate on price until you try your luck.

The other main element of affordability is interest rates. There is a lot of contradictory information out there on interest rates, which drives panic each time mortgage rates rise.

To make sense of interest rates I’d encourage you to think about the big picture. Inflation is ultimately what will drive interest rates up. With that considered, we see no substantial inflation pressure in our economy. The Government doesn’t have a lot of cash to throw around, we’re in the midst of a big economic downturn, we have growing unemployment, export prices and tourism are in decline, and banks have more rigid lending policies. All of this means housing prices will not go anywhere any time soon.

If there is a risk of mortgage rates rising, it is since banks are in the midst of a term deposit price battle that is escalating their funding costs. As a consequence we might even witness short-term mortgage rates rise somewhat in the near future.

That does not mean you should dash in and fix for five years! New Zealand’s elevated long-term rates have been driven up too far already by more demand than supply. Investors just aren’t happy locking their funds in for 5 years in this turbulent world. In other words long-term rates have a huge “risk premium” associated with them rather than an expectation that rates will rapidly rise.

Ask anybody with some financial nous and a good understanding of the market and they will no doubt explain that there is absolutely no call to leap into long-term fixed rates. The only reason you might like to fix is if you like having the certainty that a fixed rate offers, but in that case it’s still a good idea to fix for a short term and then see where the market ends up.

My view is that the best bang for your buck is currently the 12 month rate at 5.50%. The 2 year fixed rate at 6.50% suggests that the 1 year rate needs to rise to 7.50% in a year’s time for that to be good value. Normally, long-term rates are overpriced in relation to short term rates. Basically you will pay a reduced amount of interest over the next three to five years using successive short term fixed rates than you would at current long-term rates.

If you’re the type of homeowner who’d rather ‘set and forget’ and lock in to a long term rate now instead of worrying about it every 12 months or so, make sure you set an interest rate of 8 percent for your monthly repayments base. Doing this will see that any rates rise in the future will not affect your repayments.

If you’re left a little bewildered as a first time buyer by interest rates, it is important to take every percentage point seriously. While the difference between 5.5 percent and 6 percent may not seem like a great deal on paper, in reality paying an average of .5 percent less over the entirety of a $330,000 mortgage will be equal to savings of more than $80,000 in interest. Can you think of better ways you’d like to spend that $80,000? If your answer is yes, invest a little time in discussing your financial situation and having your concerns answers by a good financial advisor. Not only will they be able to talk you through interest rates and how they impact your mortgage, but they’ll also be able to direct you to ways to being debt free and mortgage free faster.

Have you heard of the old saying, you can’t see the forest for the trees? Well, putting all your attention Tadalis SX into interest rates and borrowing costs is like starring at just two trees and not appreciating the vastness of the forest. While they’re certainly important, try not to get caught up in one or two details too much. Consider the bigger picture and remember that just being able to join the market and secure a great deal will allow you to make money in the long term.

Especially good news for first time buyers is that if you have no other debts you may be able to get approval to borrow as much as 95 percent. That could allow you to buy the perfect house before the end of the month! You never know when you could stumble across a fantastic buy and potential first home, so speak to some prospective lenders now to discuss pre-approval and help you into the housing market even faster.

Author Bio: John Bolton is one of New Zealand’s leading experts on property finance, particularly mortgages and interest rate risk management.

His business, Squirrel Mortgages, helps New Zealanders buy over $10m of property every month.

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