What would God choose to be- a borrower in today’s market conditions or a lender? Well! Though expert economists and real estate pundits may give the question a try, it is perhaps only God who can give the right answer.
This is because both borrowers and lenders have opportunities ahead and traps in the way too. Let me take you through the situation from the point of view of someone looking to renovate his home.
This is the best time for building your home
The housing market tempo has shifted. There is certainly a positive stir around but it comes with its own difficulties. Yes, THIS is the best time to build a home but the margin for error is minimal- THIS is the time and any delay you make will toughen the deal for you. Why? Is that the question you ask? Ok! The answer is simple.
It will be difficult to lure the labour industry back
The home building industry has gone through a huge crisis in the past few years. This had turned the labour industry completely away from them. Now, things are getting back into shape but it would take some doing to lure back the labourers. The best way to do it is to set the money bait for them.
Higher labour payments would increase construction costs
Is it not natural that the more the builders pay the labour forces, the higher your construction costs would become? In fact, it is more like a rule. When the home building industry recovers from a difficult period, it has to seek labour at a higher cost, thus increasing the cost for homeowners. So now you get why it is the best possible time to get your house built (with very little room for delay)?
How is the home renovation industry expected to shape up?
Now let me come to the home renovations industry before giving you a hint to God’s dilemma proposed in the first paragraph.
The housing tempo has been partly brought in by the climate of low interest rates, partly by the increase in population and also in part by the growth in income expectations. The optimism in the market is running in favour of dwelling prices and the median prices across Australia has shot up.
More equity release due to higher dwelling prices
This would definitely release more equity for homes (especially because homeowners are willingly paying the same monthly mortgage as before despite the drop in interest rate) and homeowners will be able to borrow against it.
Most of the homeowners like using the borrowed money to renovate their houses; 1) for the purpose of renting out 2) for getting its price appraised 3) to make it closer to their dream homes. Now, the buyers always need more confidence in order to make capital investments in their houses.
Buyer confidence is back
This confidence has been sorely missing since the global meltdown but the increase in dwelling prices (due to the housing market recovery) is making the homeowners more confident about taking up their dream home renovations.
Would God be a borrower or a lender then?
So would God want to be a borrower today and go ahead with his home renovations projects; 1) borrowing against his home equity, 2) borrowing with the help of low interest rates and 3) borrowing with the knowledge that it is the best time to undertake home building or renovation due to expected escalation in labour costs in coming times.
In doing so, there is a chance He makes a huge profit for himself.
Or would God want to be a lender in times when 1) banks are showing lesser belly for lending 2) we have come through years of stagnant home valuations and 3) there is limited guarantee that the housing market euphoria will stay.
What would you choose to be in the present situation- a borrower or a lender?
N.B- Albeit a small note, God would be way above such mortal considerations.