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In January 2022, interest rate hikes may cool the housing market. Demand could decline among credit-based buyers, while cautious investors focus on financial planning and risk management.
Start of a Rate-Hike Cycle and Market Expectations
In January 2022, uncertainty surrounding interest rate hikes dominates financial markets. Due to inflationary pressures, the beginning of a rate-hike cycle may significantly impact the housing market, which had previously benefited from favorable borrowing conditions.
How Do Rate Hikes Affect Housing Demand?
Rising mortgage interest rates make housing loans more expensive, which can dampen buyer enthusiasm—especially for those relying on credit. This may lead to decreased demand and price stabilization, or even slight declines.
Will Investors Become More Cautious?
In a rising interest rate environment and amidst market uncertainty, some investors may act more cautiously and reduce risk exposure. This could lower the volume of real estate investments and affect demand in the premium segment.
Which Segments May Be Most Affected?
Credit-dependent buyers may pull back, making the mid-market and first-time homebuyer segments the most sensitive to rate hikes. In contrast, cash buyers and long-term investors may be less impacted.
What Can Buyers and Investors Do?
It is essential to plan financing in advance and factor in potential interest rate increases. Closely following market developments and seeking expert advice can help minimize risks.
Summary
In January 2022, the start of interest rate hikes marks a turning point in the Hungarian housing market. With the possibility of market cooling, buyers and investors should adopt cautious strategies and make well-informed decisions moving forward.
