The topic of rising mortgage rates and their effects on potential homebuyers has become increasingly relevant in recent IELTS examinations. Based on analysis of past test papers and trends, questions related to housing affordability and financial challenges in property markets have appeared multiple times, particularly in countries experiencing significant real estate market fluctuations like how interest rates influence real estate values.
Rising mortgage rates affecting potential homebuyers in real estate market
Analysis of Recent IELTS Question
Some people believe that rising mortgage rates are beneficial for the economy, while others argue that they create significant hardships for potential homebuyers. Discuss both views and give your opinion.
This question requires candidates to:
- Examine different perspectives on mortgage rate increases
- Analyze economic impacts
- Consider effects on individual buyers
- Present and justify a personal viewpoint
Band 8 Sample Essay
Rising interest rates and their impact on mortgages have become a contentious issue in many economies, with valid arguments on both sides regarding their overall effect. While some experts advocate for higher rates as an economic stabilizer, others emphasize the burden this places on prospective homeowners.
Those supporting increased mortgage rates argue that they help control inflation and maintain economic stability. When rates rise, it reduces excessive borrowing and speculative property investment, which can prevent dangerous housing bubbles from forming. Additionally, higher rates provide better returns for savers and can strengthen the banking sector, as discussed in studies about impact of mortgage rates on housing demand.
However, critics rightfully point out that elevated mortgage rates create significant challenges for first-time homebuyers. Higher monthly payments make homeownership increasingly unattainable for middle-income families. This can exacerbate social inequality as property ownership becomes restricted to wealthy individuals. Furthermore, reduced housing demand can lead to job losses in construction and related industries.
In my opinion, while rate increases may be necessary for economic management, they should be implemented gradually with support measures for affected buyers. Governments could introduce targeted assistance programs for first-time homeowners while maintaining the stabilizing effects of higher rates. This balanced approach would help achieve economic objectives without severely impacting housing accessibility.
Band 6.5 Sample Essay
Rising mortgage rates is a topic that many people debate about nowadays. Some people think it is good for the economy but others say it makes life harder for people who want to buy homes.
People who support higher mortgage rates say it helps the economy in several ways. First, it stops people from borrowing too much money which can cause problems later. Second, it helps control prices in the housing market. Banks also make more money when rates are higher, which is good for the financial system and how rising inflation affects home loans.
On the other hand, higher rates make it very difficult for normal people to buy houses. When mortgage payments are too high, many families cannot afford to buy their own home. This is especially hard for young people who are trying to buy their first house. Also, when less people buy houses, it affects businesses that build and sell homes.
I think that higher mortgage rates cause more problems than benefits. While they might help the economy in some ways, they make life too difficult for ordinary people. Governments should find other ways to control the economy without making houses so expensive for everyone.
Key Vocabulary
- Mortgage rate (n) /ˈmɔːɡɪdʒ reɪt/ – The interest rate charged on a mortgage loan
- Housing bubble (n) /ˈhaʊzɪŋ ˈbʌbl/ – A period of unsustainable growth in housing prices
- Speculative investment (n) /spekjʊlətɪv ɪnˈvestmənt/ – High-risk investment made to profit from market value changes
- First-time homebuyer (n) /ˈfɜːst taɪm ˈhəʊmbaɪə/ – Someone purchasing their first property
- Economic stabilizer (n) /ˌiːkəˈnɒmɪk ˈsteɪbəlaɪzə/ – Factor that helps maintain economic balance
In conclusion, this topic remains highly relevant for IELTS candidates as it combines economic policy with social impact. Future questions might explore related themes such as housing affordability, government intervention in property markets, or impact of inflation on home loans. Practice writing essays on these topics and share your responses in the comments section for feedback and improvement.
