Rates fell once again as the 30-year fixed-rate mortgage averaged 7.03% this week, down from 7.22% one week ago, as reported in Freddie Mac’s Primary Mortgage Market Survey. Six weeks prior, the rate neared 7.80%, indicating that mortgage rates have been on a consistent downward shift. Unless the Feds change course during their meeting on the 12th, analysts predict rates will continue to lower.
Rates dropped amid reports released Tuesday that suggest the economy is losing momentum. One such report revealed job openings plummeted this October to the lowest level since March of 2021. Melissa Cohn, Vice President of William Raveis Mortgage, touches on this, stating, “New job creation and consumer spending will impact mortgage rates – if we see that fewer jobs are created and consumer spending declines, slowing the economy, then mortgage rates will drop.”
The job market pushing mortgage rates down is not surprising as rates can be somewhat volatile and affected by a host of macroeconomic factors, which include inflation, supply and demand, and global events, among other things.
When Mortgage Rates Drop Property Prices Typically Go Up Offering a Chance to Capture Equity
Rates being pushed down in this way creates ideal conditions for investors to begin buying performing assets such as rental real estate.
Currently, the rate sits at its lowest since August of this year, and because interest rates affect house prices, with the pair generally having an inverse relationship, experts are using these numbers to predict that a surge in home prices may be around the corner.
Investors can use this to their advantage – if a rental property is purchased and mortgage rates continue to drop while the value of the house rises, equity is captured, and this equity can be used as leverage to grow a real estate portfolio.
Related Article: Top Benefits of Buy and Hold Real Estate for Investors Who Use Leverage
Investors can feel secure about building equity at this time because newly released data from Attom, a property data analytics company, revealed that almost half of mortgaged residential homes in America are equity-rich, despite market slow down.
As for the mortgage rate, although coming down, the higher-than-usual rate can still intimidate investors. However, experienced professionals know it’s best to “marry the house and date the rate”. In other words, you can always refinance when rates drop to an ideal percentage.
Investors are Buying Real Estate During the Calm Before the Storm
Seasoned investors recognize that a lucrative opportunity may pass if they wait too long to jump into the market. Why is this the case? Well, investing right now, in these particular conditions, enables investors to secure available properties before home buyers flood the market when the rates shoot down further, basically buying during the calm before the storm.
Investors who are in a situation where they would like to buy as quickly as possible to take advantage of the current housing climate, but are unable to make a real estate deal happen themselves, should utilize the help of a full-service real estate company that can push a deal through rapidly. Morris Invest has a team of experienced professionals who locate prosperous markets, build new construction properties, fill them with tenants, and assign a property manager.
Our team also helps you obtain financing, as well as rollover an underperforming 401(k) into a self directed IRA where retirement funds can be utilized to invest in rental real estate, enabling you to save for the future the right way. If you trust your 401(k) to get you through retirement, please read our article on why the 401(k) is a bad investment; it’s guaranteed to have you scrambling to get your money out of it as soon as possible.
Working with a real estate investment company can place a cash flowing rental property in your hands before the market begins to flood. Feel free to schedule a call with Morris Invest to get the ball rolling on purchasing a rental property, so you’re ahead of the game.
Until then, these investing resources can be incredibly helpful.
Morris Invest Resources & Programs
- The Freedom Number Cheat Sheet
- Financial Freedom Academy
- The 90-Day Financial Empowerment Bootcamp
- Morris Invest & SDIRA Program Overview
If you’re serious about starting the investment process, possibly before the end of the year, we recommend reading over our related article, How to Easily Buy a Rental Property Before the End of the Year.
Also, take a moment to watch this informative video titled, The BEST Time to Buy Real Estate. It discusses the benefits of buying real estate no matter what’s going on in the economy.
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