Will fixed rate mortgages remain available as interest rates rise?

I am preparing to leverage invest in residential real estate for passive income. Buy and hold, cash flow is the priority over appreciation. Given that interest rates can, basically, only rise, I am concerned that lenders will not continue offering fixed rate loans at a time of uncertainty in the markets and interest rates. Do you think this is a reasonable expectation? I consider Real Estate to be in somewhat of a bubble right now and prices will soon come down. So, I prefer to wait before investing, but not at the expense of missing out on low interest fixed rates. 

Investing, Real Estate
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April 2017
67% of people found this answer helpful

Of course fixed rate mortgages will be available. Rates will rise (or fall) in line with the bank's cost of funds and the level of consumer demand, but fixed-rate loans will not disappear.

Keep in mind that as soon as a bank closes a mortgage, they sell it (and many others closed at the same time) to third-party investors. These investors are willing to pay face-value for a loan with a fixed rate, but an uncertain maturity. So, don't worry that fixed-rate loans will be unavailable when you want one.

But think it over. Why would real estate decline in value? There are many reasons of course, but a principal reason would be cost of funding. If the price of a property declines to a point that looks attractive to you, but the interest on a loan increases commensurately, then the economics of that deal would be very similar. A large loan at a low rate would cost the same per year as a smaller loan at a higher rate.

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