Mortgage rates bounced back today, following a weaker-than-expected report on inflation and a relatively strong 30yr bond auction.  Rising inflation means that bond investors will receive future payments that won't buy as much as those same dollars would buy today.  As such, when key reports show inflation is in check, bond investors are more willing to buy.  A strong showing at the 30yr Treasury auction signals a similar willingness to buy bonds.  Excess demand means higher bond prices and lower interest rates--all other things being equal.

With all of the above in mind, it's no surprise to see mortgage rates recovering from the damage that took them near the highest levels in more than 4 years yesterday.  If you've seen one of the several mass media reports on Freddie Mac's weekly rate survey today, you may also have taken some heart in the fact that rates are "holding steady" versus last week.  Unfortunately, that's not exactly the case.

While today's strength did indeed bring rates lower than yesterday, they remain higher than last week's average offering.  The discrepancy is due to Freddie's survey methods focusing heavily on Monday/Tuesday rates whereas we're objectively tracking actual lender rate sheets every day.  Could we soon end up back below last week's average?  Certainly!  But that's merely one of two possibilities, and the other is less pleasant to consider.  

Bottom line: today is better than yesterday, but interest rates remain on the ropes.