Home loan rates drop after Easter, sales still low

Home loan rates drop after Easter, consumers still scared

Yesterday (13 April 2009) was a good day for borrowers as Mortgage Based Securities had a stable day, which in our current economic mood is a great day. The stability in the Mortgage Based Securities allowed lenders to reprice the cost of lending for the better (better for borrowers that is). This has had the effect that overall mortgage prices have dropped. Will this help the economy? Well it can’t harm it. The sales of new houses and resales have improved in the last month thanks to drastic price cuts, if mortgage rates drop even further it should have the effecting of increasing confidence and “buying” spirit among investors.

The consistent drop in mortgage and home loan interest rates brings an interesting question to the Real Estate forum. What makes a Real Estate economy boom or flop? Is it the interest rate? Or the ratio of fear/greed in the economy as a whole? Should we be looking at population trends and other natural markers? All of these factors no doubt have a part in explaining the current economy. However there is one index investors keep a very close eye on, and that is the retail sales report. This reports the spending of consumers. As two thirds of the United States economy is made of consumer spending, retail sales is a litmus test of the economy’s health. The result? Not good, economists were expecting a slight increase from last month, however the rate declined  by 1.2%.

Most economists believe that this recession will not stop until we, consumers as a collective start spending. Creating a spending spree when jobs are dropping like flies is no easy task. The Real Estate sector is another flag marker for the economy as a whole that needs to improve for the situation to improve. This is the reason why the governments are trying their best to lower the cost of borrowing and making easier to invest and spend.

How can we take advantage of this situation without getting further into debt? There is no clear cut answer but the record low interest rates might signal it is the time to change your mortgage provider. If you have a good credit score and have the income to back your loan you could re-negotiate your mortgage terms with another bank (It will be much harder to do so with your own bank) saving yourself a small fortune.

In fact if you have the circumstances it would be folly not to at least check the savings to be made if you change your mortgage provider. Call your bank, ask for the details on your mortgage. By details we mean the current interest rate, the pending capital to be paid, how long is left for the loan’s tenure to end, etc, etc… With these details go online to one of the many mortgage search engines and introduce your mortgage data. Check the top 5 finance providers and wait to see the savings you can make.