US home mortgage rates that were hovering around 2.5-3.5% during 2009-2011 have started moving up and have reached 4.6% now. The rates can move further if Fed hints at any increase in interest rates in late 2014 or early 2015. The early anticipated move in mid 2015 might come much earlier as the economy picks up steam. The housing market is already up 40-60% in areas like Arizona. Good news for US.
Bad news for India. Such a scenario is the worst case for emerging markets like India. Most of the fixed income money will move back to enjoy the higher rates in US. The returns would be higher than India because the exchange rates eat up any returns from fixed income earned in India. The withdrawal might provide an opportunity in both stock markets and property markets with a lag of 6 months to each other. I guess, who ever is saving up for a home, should wait for these events to roll in. Obviously, lot of macro management both in India and US might move the date of reckoning by 8-14 months. But, it has to eventually happen, there is no stopping it. So, no need to hurry into a decision, looking at the increase in prices in cities like Chennai and Bangalore. Good news for the customer.
Happy shopping!!!
Bad news for India. Such a scenario is the worst case for emerging markets like India. Most of the fixed income money will move back to enjoy the higher rates in US. The returns would be higher than India because the exchange rates eat up any returns from fixed income earned in India. The withdrawal might provide an opportunity in both stock markets and property markets with a lag of 6 months to each other. I guess, who ever is saving up for a home, should wait for these events to roll in. Obviously, lot of macro management both in India and US might move the date of reckoning by 8-14 months. But, it has to eventually happen, there is no stopping it. So, no need to hurry into a decision, looking at the increase in prices in cities like Chennai and Bangalore. Good news for the customer.
Happy shopping!!!
