Favorable conditions for bonds helped mortgage rates move lower this week. Despite improving economic growth, there have been few signs of rising inflation in the current environment, which has helped keep mortgage rates at low levels. The Consumer Price Index (CPI) was up 0.5% in December and Core CPI, which excludes the volatile food and energy components, was up 0.1%. For the year, CPI was up 1.5% and the core rate was up 0.8%, the smallest annual gain since records began in 1958. The Fed prefers a range for core inflation between 1.5% and 2.0% for the long term. A second important influence for mortgage rates was the stronger than average demand from both domestic and foreign investors for $34 billion longer term Treasury securities. Mortgage rates generally benefit from strong 10-year and 30-year Treasury auctions since mortgage-backed securities are similar investments. Currently, the 30 Year Fixed is 4.375% (4.504% APR) and the 15 Year Fixed is 3.750% (3.957% APR). This week will focus on the housing sector with Housing Starts, Existing Home Sales and Leading Indicators.