Hike in Interest Rates a Double-Edged Sword

July 26, 2007

Hike in Interest Rates a Double-Edged Sword for Investors

LEADING New Zealand property investors have branded the latest hike in interest rates as a 'double-edged sword'.

The Reserve Bank announced today that the rates would go up from 8 per cent to 8.25 per cent.

This is the fourth time interest rates have been hiked since March this year.

Investors at Richmastery, New Zealand's largest real estate education and mentoring company, have been keeping a close eye on developments.

Richmastery director Phil Jones said: "I am in no doubt that the continued rise in interest rates will have an impact on the market.

"It will undoubtedly put pressure on those trying to enter the market and those with existing mortgages on their own homes as well as some investors."

It is predicted that the latest rise will see more people selling unsustainable investment properties and indeed their own homes in favour of renting as in many cases it will become cheaper to rent than to buy.

However, Jones also sees potential for savvy investors to capitalise even in the current climate.

"This rise is a double-edged sword," he said.

"Investors who have the right education and tools will still be able to build good portfolios."

"For example there are new finance products now available such as 'cashflow-positive loans' available through Connect Mortgages in Auckland.

"These offer interest rates as low as 5 per cent which will obviously appeal to investors.

"It is also important to emphasise that investors are not emotional about property, as with any business, it is all about being well equipped to ride economic changes to ensure you still come out on top.

"The increased pressure on home-owners will see more and more properties coming on to the market and being sold at a discount.

"Plus the need for rental properties will increase - so in many ways the current climate is favourable for investors."

Richmastery offers a wide range of educational tools to help all those looking to enter the world of real estate.

Anyone looking for advice on how to successfully buy property in any market, whether it be a family home or an investment, can register for a free 'introduction to property' seminar at: www.reallifenow.co.nz or look at Richmastery recently released book Supremacy Negotiating Real Estate Deals available to buy at: www.richmastery.com

ENDS

© Scoop Media