Mortgage rates broke their four week fall last week as rates rose slightly with the benchmark thirty-year ending up right at 5.00% after another strong week for the stock market depressed bond prices. But that has since changed this week with bonds recovering most all of last week’s losses sending mortgage rates back below 5.00%.

Bad economic news has won out over some better than expected corporate earnings reports to send stocks lower in the first two days of the trading week. Outside of Wednesday’s report on consumer prices, which could be a market mover, there is little economic data left to be released this week so the focus will return to corporate earnings. The most recent release was after the closing bell on Tuesday when Intel reported it beat Wall Street expectations for both sales and income in the first quarter.

Earnings reports like this have the potential to reignite a rally in stocks and could drive mortgage rates higher. In the longer term, I still feel we will remain in a range for the remainder of the second quarter but I do not see rates falling much further. On the contrary, I look for rates to begin slowly rising starting in the second half of 2009 as more tangible signs of an economic recovery become evident.