The national average for the 30-year fixed-rate mortgage fell to a record low today: 5.45%. That's good news for the 30% of Fools who have not yet refinanced their mortgages according to our latest poll on our home page. What are you waiting for? Do you realize how much you can save by financing at these rates? Get thee to a bank. Or better yet, head over to our mortgage center where you can get the refinancing ball rolling immediately.

All the major market indexes rose into positive territory today, despite some hullabaloo about the Producer Price Index (PPI) falling 1.9%. Read our take on it to see if you should care.

In today's Motley Fool Take:

SARS Sears Airlines

The true impact of severe acute respiratory syndrome (SARS) was made clear today with news that it has caused more damage to the global airline industry than the Sept. 11 terrorist attacks, the war in Iraq, and foot and mouth disease in Britain combined. In all, the United Nations is projecting 5 million people in the travel and tourism industry will lose their jobs because of SARS.

The International Air Transport Association says airlines have lost over $10 billion this year. "At no time in the history of aviation," spokesman Andrew Drysdale told an international conference in the Philippines, "have we ever seen declines of the magnitude that we are now seeing in the Asian region as a result of SARS."

The impact is most keenly felt by regional Asian carriers, of course, some of which are seeing only 15% to 20% of their seats filled. But nearly every airline in the world is affected, especially the majors like American(NYSE: AMR), United, Delta(NYSE: DAL), and Northwest(Nasdaq: NWAC).

Besides the airlines, cruise operators such as Royal Caribbean(NYSE: RCL) and Carnival(NYSE: CCL), and theme parks like Disney(NYSE: DIS) are feeling some effects (see SARS and Stripes, by Rick Munarriz).

The epidemic has killed nearly 600 people worldwide. China, with about half those deaths, is threatening life in prison or even execution for anyone violating quarantine orders.

Quote of Note

"It is said an eastern monarch once charged his wise men to invent a sentence, to be ever in view, and which should be true and appropriate in all times and situations. They presented him with the words, 'And this, too, shall pass away.' How much it expresses! How chastening in the hour of pride! How consoling in the depths of affliction!" -- Abraham Lincoln

Online Retail's Promise

A new study from retail association and trade group Forrester Research(Nasdaq: FORR) provides some sweet news for online retailers, particularly at a time when the environment for retailing in general has been sour. According to "The State of Retailing Online 6.0," 2002 was a solid year for e-tailers, and 2003 looks even more promising. and Forrester used data from 130 retailers to create the study. They found that online retail sales shot up 48% in 2002 to $76 billion, making up 3.6% of total U.S. retail sales. The outlook for 2003 calls for 26% growth to $96 billion. Should that play out, online retail sales will grow to 4.5% of total sales, pointing to an industry that still has plenty of expansion room.

The good news doesn't stop there. The study also highlighted online retailers' gradual steps to profitability. In 2002, 70% of the surveyed retailers sported positive operating margins. That's up from 56% in 2001. The group as a whole broke even last year, compared to a 6% decline in income the year before.

These results mirror what we've seen from companies like AMZN), which reported a fourth-quarter profit and produced $135 million in free cash flow in 2002. The company has been shaving its losses, raking in record sales and appears ready to continue its good times.

The study also addressed online retailing as it relates to so-called "clicks-and-mortar" outfits – real world stores with an online presence, such as Sears(NYSE: S) and Wal-Mart(NYSE: WMT). Retailers of this type reported that 46% of their online customers had also purchased items from them offline. This indicates that setting up shop in cyberspace for these traditional retailers is a smart idea.

In all, the study provides hope for online retailing and its future. It's an industry still in its infancy in many ways. Online retailers that have made it through the leanest of times will ultimately be rewarded.

Get a Broker

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Homes Are More Affordable

Boy, life can get repetitive. Mortgage rates have dropped again, setting another record low. Today, Freddie Mac(NYSE: FRE) announced that its survey of mortgages indicates that rates dipped to 5.45% from 5.62% a week ago.

And home sales remain brisk, despite higher prices. Yesterday, the National Association of Realtors announced that sales of existing homes in the first quarter of 2003 set a new record. The seasonally adjusted annual rate of sales jumped 2.2% to 6.7 million units -- including single-family homes, condos, co-ops, and nudist colonies for the blind. The median home price rose from $151,000 to $161,500 year over year.

Higher prices may sound like bad news to prospective homebuyers. But when today's rates are compared to rates just a year ago, a home is actually more affordable.

According to Freddie Mac, the rate on a 30-year mortgage on May 16, 2002 was 6.89%. Interest and principal payments on a $125,000 mortgage at that rate comes to $860 a month. However, with current rates, that same monthly payment would cover a $152,000 mortgage. So, even though housing prices have risen 7% over the past year, the purchasing power of the lower interest rates has risen 22%.

Of course, it's not quite that simple, since today's purchaser will have to pay higher taxes and homeowners insurance premiums and come up with a larger down payment to escape private mortgage insurance. But from the perspective of borrowing to buy a house, today's purchasers are better off than a year ago, despite soaring home prices.

What else do these even lower interest rates mean? Here are a few considerations:

  • If you're paying almost 7% or higher on your mortgage and you haven't refinanced, you can save hundreds by doing so. Really. Stop delaying.

  • If you will need to borrow money to send your offspring to college, a home equity loan is looking pretty good. But generally, consider this option after the student has taken advantage of any federal loans offered in the financial aid package. (For more on paying for school, check out our latest book.)

  • If your work is in any way related to the real estate industry, build up a nice savings account while times are good. Many knowledgeable people say we're not in a housing bubble. But the boom won't last forever, and commission income will drop and jobs will be lost when the slowdown occurs.

Want to know if refinancing will save you money? Curious whether you should get a 15-year or 30-year mortgage -- or if you can afford that new house? Looking for tips on making a move much easier? You're in luck -- May is Buy, Sell, or Home? month at the Fool. Stop on by for a visit -- our door is always open.

Discussion Board of the Day: McDonald's

Did somebody save McDonald's? Can it put a smile on for its investors? Will the company survive its Dollar Menu? All this and more -- in the McDonald's discussion board. Only on

Quick Takes

Discount retailer Target(NYSE: TGT)reported first-quarter earnings today that less than impressed the Street. It earned $349 million, or $0.38 a share, in the quarter ended May 4. In last year's Q1, the company netted $345 million (also $0.38 per share.) Analysts expected it to earn $0.39 a share, which was itself an estimate lowered from $0.40. Total sales rose 7.6% to $10.32 billion, while same-store sales sunk 0.1%.

The White House wants to extend the online sales taxmoratorium, according to Treasury Secretary John Snow. The moratorium is set to expire this coming November. Speaking to a group of tech execs, Snow said that he and Commerce Secretary Don Evans will send a letter to Congress, appealing for the ban on Internet sales taxes to stay in place.

Teen chain American Eagle Outfitters(Nasdaq: AEOS) isn't flying high today. First-quarter earnings screeched to $6.4 million, down from last year's Q1 profit of $12.7 million. Per share, that's $0.09 vs. $0.17. It warned last week that earnings would be $0.08-$0.09, below the anticipated $0.10-$0.12. Total sales rose 5% to $291.9 million. Same-store sales, though, declined 5.8%.

Soon Chileans will be able to get a little taste of Starbucks(Nasdaq: SBUX). The java giant announced its entry into Chile today, with plans to open a store in Santiago during the second-half of this year. Starbucks is partnering with Grain Red SA, a local Chilean company, for its launch into the country. It will mark Starbucks' first real move into South America proper. It already operates stores in Mexico and Puerto Rico, and has designs on Argentina, Brazil, Colombia, and Venezuela.

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And Finally...

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Bob Bobala, Robert Brokamp, Mathew Emmert, Jeff Fischer, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Reggie Santiago, Dayana Yochim