The Bureau of Labor and Statistics released the Consumer Price Index (CPI) numbers for all urban consumers and over the last 12 months, the index has fallen over 2.1%. This is the largest decrease since January 1950.
What does this mean?
Well, the little mortgage birdie tells me that with bad economic news, interest rates usually improve. Silicon Valley home and property owners can expect a possible 0.125% improvement in interest rates today.
Another thing to keep an eye on is the government’s (Federal Reserve and the Treasury) involvement in purchasing mortgage backed securities per the Obama Stimulus Plan. Don’t expect this to last. The Fed has announced that they will be purchasing mortgage backed securities till the end of 2009, however the Treasury has announced that by October of this year, they will no longer be purchasing these securities. The tax credit for home purchases deadline is also going to be at the end of October.
Based on this information, there’s a high probability that rates will rise at the end of 2009
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This said, no one knows for sure, but these are good data points to keep track of. One thing is for sure about real estate and tomorrow’s mortgage rates: they will either rise or fall. 
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