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Property investment in the US is cheaper than ever with mortgage rates lowest since 1950s

Mortgage rates in the United States are now near their lowest levels since long term mortgages were first offered in the 1950s, according to new research.A 30 year fixed mortgage currently costs as little as 3.6% in interest to service each year and this has made houses more affordable and driven a big rise both in mortgage applications and in refinancing to cheaper deals, experts claim.

American property has also turned the corner with prices continuing to rise, according to the latest research from the leading measure of US home prices S&P Case-Shiller index. The data shows that house prices rose by over 10% in the last four quarters and all 20 cities in the index posted positive year on year growth.

For those considering property investment in the US, the climate is favourable and hotting up. Low, but rising prices and increasing average rental rates make it possible to achieve much better yields than in the UK, says Axis Property Investment.

‘America’s demographics also support the market. Younger people still find houses relatively expensive, so they’ve switched en masse to renting. As a result, America’s rental market has boomed in recent years, helping to support prices,’ the firm says in a report.

It also points out that rental vacancies are now at their lowest levels in over a decade, while the homeowner vacancy rate is at its lowest point since March 2006.  Selected regions in the US can easily give a rental yield of well above 5%.

While there are great opportunities to be seized in the US, there are also significant risks for overseas buyers and the firm says buyers need to realise that real estate brokers don’t necessarily operate in the same way as in other countries.

It points out that properties are often sold as seen and you can be taking on a property with associated problems either in terms of the fabric of the building or debts linked to the address which may be passed onto the new owner.

‘When buying real estate in the US you are dealing in with property thousands of miles away. The legal system, language and feel may be similar to the UK or indeed elsewhere, but there are a many differences, both subtle and significant. Location is absolutely critical, for example, as one side of a street may be a great investment while the other side is a disaster,’ the firm says.