On Apr 6, 6:15 am, "sinister" <sinis...@[EMAIL PROTECTED]
> wrote:
> How can an individual investor hedge against interest rate risk?
>
> I might buy a house in the next year. My read of the situation is that
home
> prices will decline if rates increase, and the effect will be stronger
in
> tighter, pricier markets with little undeveloped land (like the one I
might
> buy into).
>
> Are there any ways for an individual investor to hedge against interest
> rates increasing?
>
> Yes, I know that the simplest thing for me to do would be not to buy,
but my
> wife's getting impatient with renting. (Also, the risk of home values
> declining isn't so bad if one intends not to move for a long time, but I
> could see that we might move in five years, which normally isn't so bad,
but
> wouldn't be so great if rates increased a 150--200 bp (in terms of
effect on
> sales price of the home we'd buy).)
>
Yes there are ways to hedge against interest rate increases. But for
an individual you are going against professionals. It's more likely
for you to lose than to win, much more likely.
When you are talking about the price of a house that you live in
currently, getting a fixed rate mortgage is your best way. Short term
fluctuations in the price of your house don't matter to you
individually.
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