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We at Quicken Loans express our sincere condolences to anyone personally affected by the recent natural disasters in Japan and the unrest in the Middle East. As a financial blog, we’re focused on the impact of world happenings on the mortgage market, but we want to emphasize this perspective in no way lessens our sympathies for the human suffering these events have caused.

The catastrophes in Japan and ongoing political turbulence in the Middle East have led to declines in mortgage rates, opening another window of opportunity for homeowners looking to lock-in rates rate in the mid 4% range.

Freddie Mac’s weekly survey of mortgage rates, released yesterday, showed rates skidding to levels not seen since December.

Why are mortgage rates dropping now? What do lending rates have to do with events around the world?

To answer these questions, it’s important to remember that mortgage rates are tied to the overall state of US financial markets, which in turn are closely linked to markets around the world. Recent global unrest has caused world-wide stock sell-offs as financial markets flock to safer investments. In the US, this means investors have moved to treasuries and bonds in great numbers, lowering the yields on these safe-haven investments. Mortgage rates tend to track to yields in the 10-year Treasury note, so this week’s rate dip reflects these market shifts.

Ever since mortgage rates hit historic lows last year, they’ve been steadily edging upwards. According to many economists, home financing rates are widely expected to rise throughout the spring and summer of 2011. Therefore, this dip in home loan lending rates could be temporary, and may represent one of the last chances to benefit from an unbelievably low mortgage rate environment.

In fact, this decline in mortgage rates may be very brief, indeed; the yields on the 10-year bonds were edging up Thursday, indicating a possible near-future rebound for mortgage rates. Regardless of current market fluctuations, as these global situations resolve, rates will likely normalize to levels seen earlier in the year.

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