There comes a time in nearly everyones life that you want to take the biggest step towards securing your future in buying your 1st home, so you save for your first house. you budget you save again, then you see what you can afford and some how we all seem to push the boundary off what we can borrow. If you are living with two incomes going into the bank they look at you with a bigger cheque book in there hands or if you have only one income they still greet you with open arms as long as you have a decent deposit.
So most of the time I beleive we go looking at the houses we love to live in just to be shocked at the prices and then slowly, very slowly we start to down grade to the houses we can afford. Most of the time we need to move to areas where we don’t really want to be or we stay in the areas we like but have tremendous amounts of work ahead of us.
There was a time I purchased my 1st home with interest rates sitting at around 17% and with them being so high I ended up buying a house that was taken back by the bank and all they wanted was there money back so I got a good buy. This time was around the early 90s, from there we saw interest rates drop very slowly over many years,17% dropped to 16% then to 15% all was great, my 30 year loan looked like it was going to be paid in 15 yay. Meantime in America interest rates were dropping even faster to try and move house sales so I still remember seeing there interest rates dropping to nearly 0%. Now me being, probably not very bright to why they moved interest rates down did not really see the disaster ahead where many 1000s of people lost their homes and America pretty well hit a brick wall with housing and many people even lost everything into trying to invest, but all I saw was my interest rates dropping and my repayments were dropping with it.
In the mean time back in Australia, as the interest rates were dropping, peoples lending also went in the opposite direction and people would still be borrowing more money for that house they really wanted not realising Joe down the road now could also borrow more money so that house now has doubled in value nearly over night and boy did Australia see a boom in house prices in the mid to late 90s and this boom kept going higher and higher as interest dropped. luckily for last couple of years we have seen prices stay around the same.
So this is where I get confused, prices have sored, interest rates have dropped and in all that we are still in the same boat as we were in the late 80s were interest rates were 18%.
BUT, always a BUT, the only difference now is that interest rates are so low there is nearly only one way they could go, But also that is a big problem as with nearly every debt that most house holds have are sitting on the edge of payments and most of your wages are set to go to repayments with no air to breath in between. Now this puts a lot of people into a poop of a situation.
So have people been prepparing for interest rates to rise hmmmmmmm. So my advise to anyone in these kind of debts is to pay of as fast as possible, get rid of extra debts like credit cards and don’t try to keep up with Joe with a new car every year as one day, rest assured the banks are gonna want to make more money, they don’t care, once you have that loan because once you sighned those papers you have sighned into slavery for the next 30 to 40 yrs and if you really think about that, that’s the good and best part of your life. Just remember the banks are very smart they use us to battle for the best price for that house so remember that next auction who really is raising the price of that house that you really want !!!!!!!!
So weather there is a economic collapse or weather interest rates stay down or weather they go up, try and stay one step ahead.
Like most people I have had to learn the hard way also. So just looking back I hope there is some advice you can think about.
For me Dont rush, pray about it and think about the bigger picture like spending better and more quality time with your loved ones.
This is some of the best prepping you can ever do.
Once again thanks for reading God Bless.