President Obama announced his job creation plan on Thursday, September 8. We have a rundown of the nuts and bolts of the plan on our blog, but generally the $447 billion plan touts $240 billion in employment-related tax relief. The plan will offer tax breaks to companies that hire new workers and cut payroll taxes in general for employers and employees alike. The plan would add additional spending for extending unemployment ($49 billion), modernizing schools ($30 billion), and investing in infrastructure ($50 billion). The President vowed to push the plan forward in the proceeding weeks and asked Congress to act swiftly. He also allowed that he would find cuts to offset the loss of revenue to keep from increasing the deficit even more.
Wall Street didn’t respond with enthusiasm. Instead, investors were preoccupied with European debt concerns. Another terrible Friday brought the Dow down just below 11,000. This comes a week after we ended the week with a 253 point drop in the Dow after an awful jobs report. This week?… a 300 point drop in the Dow, but this time over concern about European debt. This should show that poor domestic economic news is certainly not the sole driving force behind stock volatility. On a related note, the Euro fell against the dollar to a 6.5 month low (1.3656 EUR/USD).
As a result of the sell-off, the 10-Year Treasury yield fell to a 60-Year low as investors remain cautious. This sharp drop could yield even lower interest rates, which have already been bordering on 50-year lows, but banks don’t seem to be in a rush to lower anything. Rates are low as is, banks are inundated with business, and as such have little incentive to strip away the extra profits to keep in line with the dropping 10-Year yield.
Here at Central Coast Lending we offer the 30-Year Fixed at 3.875% (4.028% APR) and the 15-Year Fixed at 3.250% (3.420% APR). These have been steady for over 3 weeks now and should only drop more given the opportunity. Keep checking in with our Facebook for daily rate updates and Blog for more information.