The Mortgage Markets And Real Estate Markets Can Influence Each Other How?
It would seem that the real estate market and the mortgage market are hand-in-glove, actually.
The past few years have seen them growing, with both being inspired by the other.
How exactly does this relationship work? Quite simple, really.
When someone has reached a stage when he can easily get a mortgage, it stands to reason that the demand for real estate goes up.
And when the demand goes up, prices go up.
So, the burgeoning opportunities to get mortgages have fueled the demand, and therefore the prices of homes, commercial establishments and construction.
Today, there's a large part of the mortgage market that consists of interest only loans - to be more precise, almost a quarter of the market.
Considering that this is where the main growth comes from, is this a safe upward ride or a spiraling to the top that could topple down very soon? As far as real estate is concerned, a higher demand means the rates in whole areas could go up, there could be a boom in construction, sending the cost of building materials up and rising commercial values could mean the rates in the residential surrounding areas go up as well.
Analysts see this as a kind of a ripple effect, not just in money terms but in attitudes.
Both residential properties and commercial establishments have mortgages that are fast approaching the million-dollar mark and no-one seems to be losing any sleep over it! When things start going up, up, up...
the laws of economics as well as physics have to come into play, one would think.
So, like a huge beautiful balloon, would both the markets continue rising till the time comes to burst? All other factors remaining the same, this glorious ride may still be a great one.
However, it just needs one spoilsport catalyst - from a natural disaster to a nosedive in the stock markets to blow up.
All said and done, there is just that much of land on this earth and no matter how much the population grows, there's just so much terra firma - no more, no less.
So it would make sense to view it as the safest investment there is.
The past few years have seen them growing, with both being inspired by the other.
How exactly does this relationship work? Quite simple, really.
When someone has reached a stage when he can easily get a mortgage, it stands to reason that the demand for real estate goes up.
And when the demand goes up, prices go up.
So, the burgeoning opportunities to get mortgages have fueled the demand, and therefore the prices of homes, commercial establishments and construction.
Today, there's a large part of the mortgage market that consists of interest only loans - to be more precise, almost a quarter of the market.
Considering that this is where the main growth comes from, is this a safe upward ride or a spiraling to the top that could topple down very soon? As far as real estate is concerned, a higher demand means the rates in whole areas could go up, there could be a boom in construction, sending the cost of building materials up and rising commercial values could mean the rates in the residential surrounding areas go up as well.
Analysts see this as a kind of a ripple effect, not just in money terms but in attitudes.
Both residential properties and commercial establishments have mortgages that are fast approaching the million-dollar mark and no-one seems to be losing any sleep over it! When things start going up, up, up...
the laws of economics as well as physics have to come into play, one would think.
So, like a huge beautiful balloon, would both the markets continue rising till the time comes to burst? All other factors remaining the same, this glorious ride may still be a great one.
However, it just needs one spoilsport catalyst - from a natural disaster to a nosedive in the stock markets to blow up.
All said and done, there is just that much of land on this earth and no matter how much the population grows, there's just so much terra firma - no more, no less.
So it would make sense to view it as the safest investment there is.
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