Interest rates have dropped again and APR is particularly favorable the last few days.  As the market struggles, rates become favorable as money is withdrawn from stocks and put into US government bonds.  Yields on bonds are historically low, and with that we have rates that are at their lowest since the 1950s.  Check it out:  30 Year Fixed 3.750% (3.758% APR), 15 Year Fixed 3.250% (3.231% APR), 30 Year Jumbo 3.750% (4.597% APR), 30-Year Fixed FHA 3.750% (4.597% APR), 30 Year Fixed VA 3.750%, (3.737% APR).

Yesterday, the Dow plummeted nearly 400 points, with investors fear of a possible global recession. The Fed offered a bleak outlook of the global economy in its announcement of "operation twist", and the Europe debt issue has no solution in sight. Investors have sold off stocks and commodities and are flocking to US government bonds as a safe haven. Interest rates should remain low for awhile now. 

The yield on the 10-yr note is at 1.91 percent and earlier in today's session it was at 1.88 percent. This is a low we haven't seen since the 1940s. What does this mean for home owners? The 10-year yield tracks mortgage rates, and the lower the yield, the lower the rates. Bond markets are surging, dropping yields. Interest rates are going to be extremely favorable the next few days. Now is the time to act if you have been waiting to refinance.

According to the Tribune, San Luis Obispo County unemployment rate in August dropped to 9.7 percent from 10.3 percent a year ago. Overall, there were 500 more people working in the county last month compared to August 2010. Compared to August 2007, when unemployment stood at 4.5 percent, the current number shows just how much further we have to go.

During the same year-over-year period, nearly 1,500 more people have joined the labor force.  To put this into perspective, unemployment numbers are calculated using the work force, and so unemployment only takes into consideration those out of work who are still looking. Individuals that are not looking for work, have officially dropped out of the labor force and do not count towards unemployment.  The fact that the labor force has grown but unemployment has still dropped, suggests additional positive jobs growth.

Education and healthy services, construction, and leisure and hospitality all posted healthy job gains during the year. These advances were offset by local government job loss, in which 2,500 jobs have been cut over the year.

President Obama unveiled his jobs plan Thursday. As is characteristic of our 24-hour political news cycle, the speech had been billed as a last-gasp attempt by Obama to help right the economy before the election cycle begins in earnest. Obama's approval ratings are hovering around the mid to low 40s and citizens largely disapprove of his handling of the economy. Obama's plan is an attempt to combat unemployment while also injecting some stimulus dollars into infrastructure projects and schools. Below, we break down some of the key aspects of the plan. Here is a LINK to the source we used (CNBC).

$240 Billion in tax relief

- Cut payroll taxes for employees in half. This would amount to a tax credit on average of $1,500 for the typical working family.

- Trim Payroll taxes.

- Provide tax breaks for companies who hire new workers. According to CNBC, this would be a "$4,000 tax credit if they hire someone who has been looking for a job for more than six months and an extra tax credit for hiring military veterans."

$49 Billion for extending unemployment.

$30 Billion for "modernizing schools."

$50 billion for investing in transportation infrastructure projects.

$35 billion to states and local governments to help prevent layoffs of teachers and safety services.

Broaden range of eligibility for homeowners with mortgages backed by Federal housing agencies to let more people refinance at today's lower rates.

President Obama noted that he will release another plan in the near future that will provide cuts to offset the cost of the jobs bill and "stabilize our debt in the long run."

The markets still fell sharply on Friday after the plan was announced, although this is more likely due to the Euro's slump against the dollar due to concern about the Greek debt situation. The Euro has hit a 6 month low against the dollar. A a result, yields on the 10-year treasury have hit a 60-year low.

Economists expected the jobs report to show fewer additions from July to August.  What they didn't expect was the jobs report to show net job growth settling at ZERO. I will be posting a longer explanation early next week but for now I will give you a rundown of the basics:

- Economists had expected to see around 75,000 jobs added in August, which is a sluggish number but still growth. Instead, we saw non-farm job growth hault completely.

- The report showed that the US added 17,000 jobs, but this gain was offset by job loss - making the net growth zero.

- Unemployment remains at 9.1%.

- We are still unlikely to see QE3 (a third period of quantitative easing, in which the Fed buys treasuries, which effectively is printing money to add liquidity to the markets). It is likely the Fed will respond with "Operation Twist" in a bid to keep interest rates low long term. In this action, the Fed would purchase longer-dated Treasurys and sell short-dated Treasurys. John Mellow of CNBC describes the maneuver as a bid to "give investors and corporations longer-term certainty and hit directly at the rates linked to consumer loans like mortgage." Link.

- Partially as a result of this report (poor European economic news didn't help), stocks dropped sharply. The Dow finished down 253 points on the day, and the Nasdaq (-65.71) and the S&P 500 (-30.45) had similar troubles.

- As a result of this sell-off, investors flocked over to the bond market, and we saw an increase in bond sale price and a drop of yields today. With security expected in the long-term interest rates, mortgage rates should remain at the low we have had recently.