Plunging interest rates make mortgages low cost loans for now
Interest rates on mortgages have fallen recently, meaning mortgages can be very low cost loans for people who can qualify for the financing. Rates for 30-year fixed, 15-year fixed and five-year adjustable mortgages are beginning to slip again after housing data indicates growth has stalled in real estate. A double dip housing recession may be possible.
Those who qualify could get a steal on a home
Currently, the market rates for home loans are starting to trend downward as demand is waning for housing. Buyers who qualify may be able to get some seriously low cost loans. The market rate for adjustable rate mortgages is hitting all time lows, as a five-year adjustable rate mortgage, or ARM, recently fell to 3.72 percent from 3.80 percent, according to MSNBC. That is up from February, when five-year ARMs hit a market rate of 3.23 percent. The average rate for a 30-year fixed mortgage hit 4.87 percent, more than the rate observed in November, when 30-year fixed mortgages hit a 40-year low of 4.17 percent. The going rate for 15-year fixed mortgages is currently 4.15 percent.
Double dip possible
A second recessionary period in housing could be on the horizon, according to CNN. That doesn’t mean a person will ever be able to purchase a home by taking out a couple of payday loans, but it won’t be pleasant to watch the real estate industry to slip even further into the abyss. Robert Schiller, co-founder of the Case-Shiller Index, says there is potential for the prices of homes “falling another 15, 20 or 25 percent.” Given that housing prices are near to the lowest levels since the great housing crash of 2008, a double dip in real estate seems plausible. If it were to happen, it could mean further bad news for an already shaky economy. Since states rely partially on property taxes, lower values mean lower revenues and that would lead to more states having serious budget woes.
The virtues of renting
Since the latest recession began in the housing market, it has called into question whether it is better to rent or buy. Buying a home can pay off, provided that a person buys when values are down and sells the home when values are up. It also helps to have paid off the mortgage or to have gained a good share of equity. However, renters pay no property taxes and have to do little, if any, maintenance. Granted, renting means having to part with more instant cash every month than a homeowner.