And we thought the worst was over. It looks like housing officials made the wrong call last month when they said that the economy wasn’t going to start dipping again. Now, economic data has shown that the economy is indeed getting weaker, and it seems that the “R” word (or recession), is going to proliferate again. From the looks of it, the forecast of the remainder of 2011 is barely seeing any positive growth.
The bad economic data continues as the monthly personal consumption and expenditures report was released. This showed a significant drop in consumer spending as compared to last year. Since 70% of the economy is based on consumer spending, any drop could mean ill fate to the economy.
Despite the low points that the economy is facing, there is an upside to this though. Home purchasers and refinancers can still enjoy low mortgage rates as they are still faced with some risks regarding the real estate market. Investors in the mortgage-backed securities market, who determine the interest rates of mortgages, can focus on this economic weakness by purchasing “safer” investments.
Last month’s mortgage rates showed a 4.79% interest rate on a 30 year fixed mortgage. Today, the average rate for 30 year fixed mortgages is only at 3.750%. That shows a significant drop that analysts were not expecting. Other rates follow suit as 15 year mortgages go down from 3.90% to 3.500%. Although this isn’t as big a drop as the 30 year fixed mortgage, the trend remains the same. Even adjustable rate mortgages are not getting any higher, with a low rate of 2.990% today, as compared to last month’s high rate of 3.490%.
Indeed, real estate investors who know how to wait out a market can expect to get better deals this time of year. It’s important to remember that although predictions are based on statistics and factual data, they are still predictions and it could be possible to see a rise in the economy again next month. While the rates are low, maybe now is as good a time as any, to invest.