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A San Francisco Chronicle mortgage rate story yesterday does a good job simplifying the factors affecting mortgage rates as we move through 2010. It’s a useful consumer-friendly piece on how the Fed’s mortgage bond program works, when it’s ending and what might happen when it does end. It also includes updates on the homebuyer tax credit, FHA loan guidelines, and loan modifications. The Basis Point contributor Julian Hebron was quoted in the story and is excerpted below.

Click the Mortgage Bonds tag below for lots of weekly coverage we do on this topic. Our next report on the Fed’s mortgage bond program and what it means for rates will be this Friday, February 19.

Julian Hebron, branch manager at RPM Mortgage’s San Francisco office, anticipates a bump up to around 5.5 percent by summer with rate volatility all year. “The Fed isn’t going to start dumping mortgage bonds on April 1, they’re just going to stop buying,” he said. “By that time, improving economic data is likely to push the Fed toward a rate hike bias. This will contribute to higher mortgage rates, slowing refi activity, and less mortgage bond supply. So while the Fed won’t be buying anymore, rates shouldn’t spike immediately because there will be less supply for markets to absorb.”