Mortgage rates hit all-time lows on December 1st and shot right back up during the month of December.   We came into 2010 with mortgage rates just trading higher one day, lower the next.

We’re starting to get some direction this week.  The FHA 30 Year Fixed rate has moved back to 5% and is now developing a fairly clear trend towards lower rates…for now.

The reason for the move this week has been that the economic news simply wasn’t that great.  The Retail Sales showed we aren’t buying very much and the low inflation data today indicates we’re not growing very fast right now.

2010 FHA Mortgage Rate Predictions

I don’t believe that the data we’ve seen is enough to forecast rates going lower for the entire year.  Things simply weren’t as great as they appeared in December and they’re not as bad as they appeared in the past 48 hours.

To get the best rate in 2010, you need to lock in your rate before the average person starts to think the economy is recovering.  There was great news in housing for nearly all of last year, the jobs market isn’t better–but it’s not worse, and the stock market has come back a lot since the lows.

Still, people aren’t confident.  The “trick” to getting a great FHA loan rate or buying at the lowest price is simply doing it before CNN broadcasts that housing has recovered.   Consumer Confidence is low and the Retails Sales reports confirm it.

When confidence levels soar, so do home prices and mortgage rates.