Sharp Fall in Mortgage Rate This Week

This week Mortgage rates fell sharply with long term rates dropping to the lowest level in more than two years. The recent volatility and turbulence in stock markets have prompted many investors to rush to the safety of U.S. Treasury securities, driving down the yields on bonds. Increased worries about a recession originating from credit crunch and a severe slump in housing market have also acted behind the fall of the mortgage rate.

According to Freddie Mac's weekly survey, the 30-year fixed-rate mortgage went down to 6.10% from last week's average of 6.20%. The rate was 6.48% one year back. The current rate is the lowest since the week of Oct. 13. 2005, when rates stood at 6.03%. A year ago, 30-year mortgages stood at 6.14%.

Rates on 15-year fixed-rate mortgages, a popular choice for refinancing, slid to 5.73%, from 5.83% last week. This week's rate hasn't been lower since the week ending Jan. 26, 2006, when 15-year rates averaged 5.70%. Rates on 15-year mortgages were at 5.87% a year ago.

The 5-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) also changed to 5.84% -- only a little bit from last week's average of 5.86%. One-year Treasury-indexed ARMs averaged 5.43%, up slightly from 5.42% of last week. The five-year ARMs averaged 5.95% and one-year ARMs were at 5.46% at this time last year.

Four New ETFs from iShares for Global REIT

Effective Friday, November 16, Barclays Global Investors listed four new exchange traded funds (ETFs) in NASDAQ market, that track real estate investment trusts or REITs:

iShares FTSE EPRA/NAREIT Global Real Estate ex-U.S. Index Fund (IFGL)
iShares FTSE EPRA/NAREIT Asia Index Fund (IFAS)
iShares FTSE EPRA/NAREIT Europe Index Fund (IFEU)
iShares FTSE EPRA/NAREIT North America Index Fund (IFNA).

Interestingly, all four ETFs allocate heavily to Australia, with Westfield Group being the largest single stock in all of them. Westfield is an Australia-based mall operator but approximately half of the malls operated by the company are in US and is thus exposed to the behavior of US economy and consumer sentiment. All four funds also have significant investments in Hong Kong and Japan markets.

It should be noted that Barclays already had an ETF similar to IFGL with a very similar name: iShares S&P World ex-US Property Index Fund (WPS). Along with a competitor in its own house, IFGL also needs to compete with 3 outsiders -- all of which are considered popular investment vehicles for diversified investment in the global real estate market:

SPDR Dow Jones Wilshire International Real Estate ETF (RWX),
WisdomTree International Real Estate ETF (DRW).

For purchasing ETFs, expense ratio is an important consideration to keep in mind. The ETFs from iShares, IFGL and WPS, have lower expense ratio (at 0.48%) than RWX (0.60%) or DRW (0.58%).

Indian Stocks Soaring High

Since the drop in global stock markets in mid-August, Indian stocks are soaring high in the midst of a very volatile market. It's rather hard for individual investors who are unfamiliar with Indian conditions and its econo-political scenerios to focus on individual stocks. However, there are 3 funds which may be considered as good vehicles to reach the global investment trend of the 21st century -- 'Destination India' :

(i) Morgan Stanley India Investment Fund (IIF). The best-performing holdings in its portfolio include Nestle India, Bharat Heavy Electricals, and Jyoti Structures. On Friday this Exchange Traded Fund (ETF) closed at $58.93

(ii) The India Fund Inc. (IFN) is a closed-end mutual fund. The fund allocates 15.8% of assets to software, 13.2% to oil and gas, 10.3% to banks, 9.4% to telecommunications, 5.4% to auto manufacturers and 4.9% to electrical components and equipment. On Friday it closed at $63.35.

(iii) iPath MSCI India Index ETN (INP). This is an exchange-traded note, an investment vehicle very similar to an exchange-traded fund. The difference is that ETNs are designed to have less tracking error than ETFs so that the value of the investment more closely mirrors that of the underlying index. On Friday it closed at $91.70.