Mortgage rates eased last week settling at the second lowest level on record according to Bankrate.com. A sense of uncertainty seems to have returned to the markets, which tend to send investors running for the safety of bonds, and that is what played out last week and Monday. On Tuesday, however, a renewed confidence that the financial system is stabilizing and signs that the recession may be easing offset lackluster corporate earnings reports to send stocks higher. This has placed upward pressure on bond yields driving mortgage rates slightly higher with the thirty-year setting in around 4.875%.  Fifteen year fixed rates are pushing up towards 4.375% and Jumbo rates remain stubbornly in the high 6% range.

For the remainder of this week I expect mortgage rates to remain off their lows and possibly push towards 5% as the bear market rally on Wall Street regains its legs. Corporate earnings will continue to be the big news for the coming week and can always have an indirect impact on rates but with more and more economists and government officials seeing a slowing of the current economic downturn and an inevitable recovery, inflation fears, while not immediate, will eventually creep back in to market expectations.

Though it is unclear when this will occur, one thing is certain. Mortgage rates cannot remain this low forever. The current combination of low rates and low home prices have made this the best time to buy a home since 1970 according to the National Association of Realtors Housing Affordability Index and the addition of the first time homebuyer credit of $8,000 means this should be a busy season as buyers rush to snap up the bargains before rates and home prices begin rising again.