EFFECTS OF INFLATION ON YOUR MORTGAGE IN UNITED STATE AND INDIA

INTRODUCTION

  Do you have an idea the impacts the inflation have on the prices of the house in the market? Inflation is a monster which should be fought right back and center by the government for it has negative impacts on the economy. In a country that experiences uncontrollable rates of inflation it would lead rise in prices of the houses in the country. United State is in record for recording rise in the prices in the years 2008 which discouraged many buyers to buy the houses.

 Exactly what are the effects of the inflation on the prices of then various mortgages? This is common question that many people ask themselves when a country is experiencing some level of inflation in the country. At time a customer may be willing buy a house either in the United State or India but end up withdrawing due to the prices at which the mortgage is charged by the lender. I firmly believe that this article will be help you have a good understanding of the impacts inflation have in the mortgage:

 Rise of mortgages rates in US and India

 Overvaluing of house in both USA and India

 Rise of mortgage rates in the market

 The main effect of the inflation in the market would be the increase in the mortgage rates in the market. For instance, if the inflation rates would increase in more than 2% in the country economy it would have some impacts in the mortgage rates in the market.  Inflation has negative effects with the interest which would be the cause of the rise in the mortgage rates in the market. In the United States market an increase in the inflation rates would get reciprocated in rates of the mortgage in the country. On the other hand the same effects of inflation on the loan rates would get experienced in the Indian market.

 Rise in the mortgage rates would mean the rise in the prices of the house in the market.  In the situation where the interest would continue to raise in the market it would means that the customer in the market who will be looking for new mortgage in the market would part with more prices in both India and United State. Banks in India have developed some measure which helps to regulate the rise of the inflation rates in the country hence ensure the prices of the house in the market get regulated.

Overvaluing of the houses in the market

 The result of high inflation in the market would lead to overvaluation of the houses in the market. The rise in the inflation rates in the market would cause the loan rate to rise thus making the lender to overvalue the houses in the market. For instances the mortgages crisis in the US in the year 2008 caused the lenders in the market to increase value of the houses thus discouraging the clients to buy houses in the market.

 Many of the lenders in the market wishes to makes some handful profits in the course of selling the mortgage thus making them to take advantages of the rise in the inflation rate in the market. If the houses are overvalued in the market it would means that the buyer would pay more than what he or she is expected to pay in the market.  Most of the lenders would be making super profits in the expenses of the buyer in the market who are buying the mortgage. For instance if the interest rates in the United  State is 3% it  would  means the lenders  would set the prices of the house at higher  prices to ensure they make good profit. The same case would apply in India and the borrower would be looking to makes some super profits in the market.

 Remedies Of Inflation on the mortgages prices

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  Acquire fixed rate mortgages

Acquire fixed rate mortgages

 Mortgages rates are usually affected by the rise in the inflation rate in the market but that could be resolved by taking the fixed rate mortgages rather than flexible mortgages.  The fixed   mortgages will acts as insurance in case there is rise in the rates of the inflation in the market. When an investor is considering taking the fixed mortgage they would agrees on the interest rates with the lender before taking the mortgages plans. This plan would help the investor to secure his or her mortgages plans against the rise in the interest rates in the market.

 The idea of the fixed rate mortgages would apply both in the US market and also in the India if effective plans could be set by the government in defense of the rise in the inflation rate. For instance if the clients is willing to take a mortgages in the market he or she would approach the banks and the expert would calculate the expected rates by the banks and advise accordingly. However it is important for any the potential investors in the market to consider choosing the best lenders in the market who will offer the best mortgages plan for their clients.

 Conclusion

 Inflation is inevitable in the mortgage market since it is determined by factors beyond the market control. The government needs to introduce some fiscal policies in the market which would regulate the rate of the inflation in the market. In the mortgages market there are e various macroeconomic factors which influences the mortgages rates at any given time in the market.  Inflation rates affect both US and India mortgages in one ways or the other hence there is need for the government to develop all the necessary measures which would help reduce the rise of the inflation in the market.  There exits some avenue which could be used by the lenders to ensure the customers in the market do not suffer big blows when there is rise in the inflation.  For instance insurance covers would help to reduce the rise in the mortgages rates in the market.