Rates down to 4.875%, be careful what you wish for!

Merry Christmas….oh, is it not Christmas yet? I thought the 4.875% 30 Fixed I saw this morning was Santa’s gift to me for being such a good girl this year. Then it vanished into thin air hours later, and we are at 5.25% . We should be careful what we wish for. Rates are extremely low, but the economy is in the tanker. There are so many things making the yields (rates) of bonds go down on a daily basis. Remember that yields/rates down means prices are up. Prices up means that there is more demand for bonds. This happens when investors lose confidence in stocks, and they buy more bonds. For the mortgage coupons these days, no one seems to know what they are buying. The spreads between buying a point are unreal, anywhere from .500% - .750%. Never in 14 years have I seen that much of a spread. So save your money to buy that point down, otherwise, you will be paying dearly in the interest rate.

Some headlines for you, that affect the market in every way: Foreclosures have risen in every state in the nation (out just hours ago), foreclosures are forecasted to double in 09, California is on the verge of literally running out of money (all of Arnolds muscle flexing and charm means nothing now!), car giants are folding, we are officially in a recession (since Dec 07- ya think?), major corporate layoffs, terrorist attacks in Mumbai, changing regime in USA for the presidency, and to top all this off, there are pirates attacking ships off the coast of Somalia. Pirates? Are we living in some fairy tale now? Some days it sure feels like it.

But let’s look at the bright side! Gas is under $2.00/gallon, every consumer product imaginable is on sale, cars prices are rock bottom, and we have a new President that has given hope to the country, and seems like the world. There are right this very minute, 4,000 job openings in the Texas Medical Center that need to be filled. Houston is adding jobs! The Medical Center led us through the 80’s, and it will lead us through this, I can assure you.

I had a thought this week that should solve our country’s problems: why don’t we use part of lottery winnings to finance these bail outs!? The mega jackpot was $146 million! Who needs that kind of money anyway?