Mortgage rates will generally go lower when fewer homes are being put up for sale and fewer new homes are being built.This happens because of a weakened economy - more people are unemployed and wages decline leading to less demand. The Federal Reserve policies also effect mortgage rates, and the economy in general.If the Federal Funds rate goes up or down, it effects the mortgage interest rates. If more money is made available by the Federal Reserve, mortgage rates will fall. If the Federal Reserve decides to tighten up the supply of money, mortgage interest rates will rise. There are other factors that effect mortgage rates too, such as the rate of inflation and economic growth.