For those who have been fortunate to avoid complete financial destruction over the past two years, the question might now be whether it is wise to consolidate debt now, or wait a little longer. After all, there is some indication that the worst may not yet be behind us.
Economic Indicators
Recently, the US manufacturing figures suggested that manufacturing continues to chug along at a slower than expected pace. This has two implications for people who are looking at whether now is the right time to consolidate debt.
The first is that slower manufacturing activity suggests that job stability may still be on unsteady ground. Without solid manufacturing activity, a large component of the US economy will lack the strength it needs to keep unemployment low and wages high.
The second is that slower manufacturing suggests that people, globally, are not buying US goods. This means that globally we may not be as well prepared to recover from this recession as we might have previously hoped.
Housing Indicators
In addition to manufacturing, another telling tale comes from the housing sector. There are mixed messages from this important corner of the economy, namely that the number of signed contracts have increased for the seventh straight month this year. Much of this bullish activity has resulted from low mortgage rates, making home ownership more affordable on a monthly basis.
This second part, however, is that mortgage rates have recently dropped below 5% again. The drop in rate suggests that a true recovery may still be months away.
So, Do I Consolidate Now?
Certainly, with lower mortgage rates the best option to consolidate debt would be to use home equity to secure a debt consolidation loan. Not only would the rate be low, but it is quite possible that as demand finally starts picking up, such low rates may never be seen again.
However, lacking a solid trendline, it becomes increasingly difficult to forecast whether rates will continue to decline, even as housing activity picks up. In fact, many economists argue that until manufacturing shows solid leaps forward and housing numbers support such strength, rates will remain soft and deciding whether debt consolidation makes sense now, or whether it makes more sense to wait will remain difficult.
Chris has more than 16 years of experience in the financial services industry, having helped thousands of clients fix their personal finances. Chris manages a website about Debt Consolidation Opinions as a way to help people with Debt Problems. His free site can be accessed at Debt Consolidation Opinions.com.
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