Is there end to soaring rise in the prices of the real estate

by ExpertBlogger 5. February 2019 11:53

Buying a house or a property for a dwelling is always an emotional investment for a buyer. Every time he/she buys a property he/she would make an investment that will reap fruits later in the years to come. For a property dealer also it is very important that the real estate market should keep its buyers hooked up for them to make any type of investment. Real estate business is not an easy market because the prices of the properties rise and fall sporadically, leading to a lot of uncertainty. The property rates however vary from market to market. It can be said that the prices are determined by local factors and people dwelling in that locality because conditions differ from place to place. There is a trend of accession followed by this market in which prices of the land rise at a quickening rate because factors like extra central bank liquidity/free credit/broiling foreign money drive a good bidding cycle well above sustainably inexpensive stages. As a result of which progressively the nervous owners of the properties will make all possible attempts to sell out before this surge ends. So, the supply would head fast but the prices would stagnate. An inventory will start building, as a result of which the sellers will start lowering the prices. Now begins a vicious cycle in which the buyers would lose the mojo and not want to invest in property where he/she once was, causing sellers to drop prices further. This tendency of demand – supply and pricing is known as Bubble in the market. However, the market has come out of the recession and the prices of the properties have hit the all-time high. The leading countries in which the property rates rose as high as 148% are Hong Kong, Iceland and New Zealand followed by China, Sweden and Canada. Studies claim that the prices of good affordable homes will rise in the coming years because of their shortage. Also, adding to this is the average growth in the earnings of the buyer which remains much lower than the rise in the prices of these houses.

Another significant factor for lower purchase rate of the real estate are the growing mortgage rates which is a big fear of prospective homebuyers, encouraging them to lock in the current options ,even though they’re less than the best. Growing rates also thrust unreliable buyers into the market, these are the ones who may choose to be on the boundary about buying the property.

Another reason for the increase of house prices is the local currency perspective of the buyer. The modern world is built majorly on debt, which is in-effect borrowing from the future generations.  Since the present generation is characteristically more restricted in its grossing capacity than the future generation, central banks of the nations all around the world are incentivized to lessen the local currency to refund those debts that are created by the current generation.  It's surely easier to say there's suddenly more money around instead of depicting the dearth of the money to actually increase efficiency that would be adequate enough to produce an extra amount needed to pay the debt. Ultimately, development in business series, credit obtainability, and demographic drifts are also the factors that drive demand of real estate that will lead to actual price increase in housing. A land closer to a population and economically active center, an owner can just sit on the economic development to crop the increase in the worth of the use value of the piece of his/her land. Housing prices go up due to the combined effect of inflation on the price of it and the increase of worth or the utility of the property. Increasing population in a given area rises the demand of the property. Heaps of opportunity to find occupation in a given area will lead people to move or immigrate to a certain region in order to find work. Land values determine the housing prices largely. 

Rising property prices over the previous 25 years have made owing a home a far-fetched dream for millions of people. But this development has created a response loop that inspires investors to venture in property market. This distracts capital from fruitful parts of the economy, and kicks the prices even extra ahead from what the typical family can afford.

Mortgages, Short Term Loan, Payday Loans, A boon or bane for the economy?

by ExpertBlogger 2. January 2019 15:00

The attractive option of getting the loan on same day and repaying it back the next payday without suffering a huge debt or credit check is the major advantage of payday loans. A small provisional loan taken to conduit the borrower's cash flow gap between paydays, is referred to as a payday loan. They are loose, but have high-interest and for a short-term and can be aptly referred as micro loans. These loans are usually settled in cash, and the lender processes the cheque or takes out from the borrower's active account on the date of maturity of the loan. 

As evident from the name, the loans are usually taken and repaid within a period as long as of 30 days. Also, the payday loans are usually repaid on next payday, therefore one can see that they are always in control of their payday loans irrespective of what others would say. Giving each one of us a viewpoint that we are our own masters of our payday loans is the most fruitful strategy charted by the providers of these loans. This is because the payday loans have highest rate of interest as they are repaid in less than a span of 30 days. 

So with this the banks and the lenders will definitely opt for Payday loans because even if a bank has or bad loans and stuff. For the lender it is low hanging fruit and as it is an easy money. However, according to a research survey it has been recorded that after subtracting the fixed operational cost and the default losses, the payday loans company does not make considerable profit. There have been cases of fake cheques presented by borrowers as security, and as a result, such cheques bounce when being en-cashed by the bank.

In developing economies like India payday loans are not very popular because of the gravest reasons like a pile-up of bad loans, Indian Banks seem to be pursuing the wrong race. The non-performing assets (NPA) accumulated by Indian lenders are higher than those of Indian banks as contrast to many of the major economies of the world, including USA, UK, China and Japan. Indian banks' gross non-performing assets (NPAs), or bad loans, stand at INR 10.25 lakh crore reported on 31 March 2018. This pie of the cake now accounts for 11.8 percent of the total loans given by the banking industry. For financial year 2018, the total bad loans of these banks rose by a whopping amount of INR 3.13 lakh crores.  It will take years before these banks can get rid of NPAs, accumulated over the years on account of multiple factors.

 Also even the lenders are not easy-going on their customers. Quite often these payday lenders are criticized. They are called the merciless loan sharks attacking the poorer section, low income areas, which are unable to realize the time value of money. Many people find the interest rate on the payday loan puts the weaker section in difficulties, whereas the richer community can afford to pay even up to 25% interest or so on their credit cards.

Pay-day loan is a benefit for customers because they can save you in times of distress. Had it been possible to know or predict financial emergencies, then payday loans would not have happened! Many at times you may find yourself caught in unexpected situations and you may not be well equipped to deal with the situation. Like when you fall sick, or your car breaks down, you would have to bear on your planning budget for the month. So for these kinds of short-term money crunch situations, payday loans are of great help as one can get instant cash right when needed. Pay-day loans can be applied for online as well and the money gets deposited into lender’s account directly and instantly.

To conclude, in the long run if the bad loans increased due to pay day loans then it would be because of the lenders who do not do a thorough check of the credit history of the customers or burrowers. However the things go smoothly and if proper background checks are conducted on both sides then they are very beneficial for the middle income strata and also the banks or financial institutes that give these micro loans on short-term basis.

Finding Best Mortgage, It's an art !!!

by ExpertBlogger 17. October 2017 17:33

Getting a home is a dream of every living organism on the earth, be it an animal, a bird or a human being. This is a dream for a common man to buy a house for himself/herself and the family in today’s times when the rates of the property and the interests on the home loans are sky hiking. To get the best deal from the floating deals in the market is a big task for a property investor and to end up with a profitable deal that can ensure minimum interest rate. 

There are many pre requisites of striking a good deal in the home buying and selling market. The most important of which is the mortgage option that should be calculated appropriately before opting for it. Apart from this a good credit score, a reserved amount for the down payment and a good lender.

Let’s discuss some point which can be borne in mind before taking a step forward towards the dream property:

• A small down payment can suffice for buying the property, unlike the popular notion of paying 20% of the cost to the builder/owner which lenders mostly tell the buyers. For e.g. as part of rural development the US government zero-down mortgages in order to uplift the poor.

• The buyers who do not have a perfect credit score for buying the house can opt for government insured lending schemes.

• The lender’s job is to calculate the minimum reserve needed to qualify for a mortgage. A lender’s duty is to ensure that in order to make a down payment the buyer’s savings should not exhaust and there should remain some reserve for the times to come and contingency needs.

• If the credit score falls less than the 20 percent down payment amount then the buyer is asked to go for the mortgage insurance that may lead to higher payments for the property.

• The mortgage insurance is an overhead till the loan is paid. However to get rid of it one can refinance the load if he/she wants under certain special circumstances.

• During the mortgage the debtor will be asked by the lender to pay all the closing costs of the mortgage which will ensure into the low rate of interest, however in doing so the credit score of the debtor will go down and hence leading to the mortgage insurance. One should be careful in opting for all the options at the time of mortgage.

• To get a good mortgage deal the buyer/debtor should keep a low profile while the mortgage is being processed , being said that , all the credit cards / spending trends etc. should not be made or made only if absolutely necessary. During the lenders survey the spending activities of the buyer if surfaces, then the possibility of the mortgage to be nullified or get cancelled is higher.

• Another most important factor that people ignore is availing the veteran loan. Serving the nation or retired nationals both can avail the benefits on the mortgage under Veteran scheme.

• A good mortgage broker can give you a plethora of options to buy the best loan without being biased of his/her products. Go for a licensed mortgage broker, that can give you access to the maximum options in least time interval.

• In order to get a good credit score, one should start clearing his debts or any outstanding money to be paid before going for the mortgage. The ideal credit score of 700 credits gives a buyer an upper hand in buying a good loan. 

• With good credit score one should also focus on a fairly good cash reserve. A good cash reserve is measured in terms of the number of months one can make the house payment in cash. This will help in positioning the buyer in a better place to get the best deal on the mortgage.

• Never go for a mortgage without comparing it with other deals in the market.

• Lastly, try to figure out as for how long you’ll be in the house that you plan to buy. If in the long run one decides to sell it off then mortgage rates can be adjusted. The adjustable rate mortgages offer low interest rates and also low initial down payments. However, when the interest rates will start to leap, these ARM’s would create a problem to the buyer with increase costs on the loan.

One must be judicious in going for the perfect mortgage scheme based on his/her requirements and long and short term benefits, always look at your need and keep in mind demand and supply structure for your targeted areas.