The mortgage rates in Europe and the U.S. have been declining in recent years and finally fell to a record low in 2017, while property prices have been quickly increasing. In 2015, the Federal Reserve System (Fed) began gradually increasing the refinancing rate. Many assume that the mortgage burden will also increase, putting pressure on property prices as investors anticipate higher return on investment. Is the price adjustment really a matter to worry about?
- Low rates have spurred demand for property, led to price increases in stable markets and stopped the landslide of prices from the 2008 crisis.
- While we don't know how every facet of the market will behave if loan rates begin to increase, we can predict that investors will lose their buying capacity and deposits will begin to yield again, though minimally.