Mortgage Rates, Buying Stock

Congratulations on getting through September and a very volatile third quarter of investing. I look forward to a more rational time period. This will have 3 sections, none written by me, that cover the topics of Vanguard Weekly Recap, Record Low Mortgage Rates, and Warren Buffet's view of Stocks. The bottom line is this, now is a great time to re-finance a mortgage and now is a great time to buy stock if you have a longer term time horizon. I hope you enjoy it.

Vanguard Weekly Recap

The U.S. economy grew slightly more than expected in the second quarter, tempering some fears of another recession. But the economy remains weak. The housing market continues to struggle, and although initial jobless claims fell significantly last week, the number of unemployed remains high. For the week ended September 30, the S&P 500 Index fell 0.4% to 1,131 (for a year-to-date total return—including price change plus dividends—of about -8.7%). The yield on the 10-year U.S. Treasury note rose 8 basis points to 1.92% (for a year-to-date decrease of 138 basis points).

Record Low Mortgages

Mortgage rates have skated near record lows for weeks. But now it can finally be said: Long-term rates in the United States have never been lower. This week, the average rate on a 30-year fixed mortgage fell to 4.01 percent, mortgage buyer Freddie Mac said in its weekly report. That's the lowest since it began keeping records in 1971.

For months, Freddie had pointed to data from the National Bureau of Economic Research showing that rates were lower in the early 1950s, when long-term mortgages typically lasted just 20 or 25 years. But Freddie says that's no longer true: Today's average 30-year rate is even lower than the average 20- or 25-year rate was in the 1950s.

The NBER's data show that between July 1950 and February 1951, long-term rates averaged 4.08 percent. Today's average 30-year rate is 4.01 percent. Both are higher once you include the extra fees most buyers pay. Those fees are called points; one point equals 1 percent of a loan amount. If you include fees and points comparable to today's low rates, the 1950-51 average would be 4.33 percent, Freddie Mac said Friday. Today's average on the 30-year, with extra fees factored in, is 4.17 percent.

The average on a 15-year fixed mortgage, a popular refinancing option, also ticked down to 3.28 percent this week. Economists say that's the lowest rate ever for that loan. Mortgage rates tend to track the yield on the 10-year Treasury note, which has risen this week to around 2 percent. A week ago, it touched 1.74 percent -- the lowest level since the Federal Reserve Bank of St. Louis started keeping daily records in 1962. As recently as July, the 10-year exceeded 3 percent. Rates on mortgages could fall further after the Federal Reserve announced last week that it would take further action to try to lower long-term rates.

Warren Buffet's View of Investing

Warren Buffett says Berkshire Hathaway has been buying stocks at bargain prices, including shares of his own company. In a live interview on CNBC from the floor of the New York Stock Exchange, Buffett revealed Berkshire has bought a net total of $4 billion worth of common stocks during the quarter that ends today. That's about as much as the company bought in the first half of the year.

He tells Squawk Box co-host Andrew Ross Sorkin, "The cheaper stocks get, the better I like to buy them, whether its our stock or somebody else's." Buffett says he thinks Berkshire's market price is very attractive, and the company has just begun to repurchase some shares under the surprise buyback program announced on Monday. Buffett wouldn't reveal how much has been bought, noting the "paperwork was just completed yesterday." It all depends on the price. "The cheaper it is, the more aggressive, generally, we will be buying. It's just like any other stock."

Buffett says the buyback program should not be seen as a sign he's pessimistic about finding potential acquisitions, and he's still looking for "elephants" to buy. The Omaha billionaire isn't worried his new purchases will be caught up in a 'double-dip' for the U.S. economy. He thinks "it's very, very unlikely we'll go back into a recession... We're coming out of a recession."

Buffett tells us profits for Berkshire's businesses are improving and the company will invest $7 billion in its plants and equipment this year. Ninety percent of that money will be spent in the United States.