Article first published as Optimum Affordability on Technorati.

As we move out of a challenging 2010 and into the future, we can pause to get a fresh perspective on the state of the economy. According to CNBC’s Diana Olick, "Mortgage Rates are all in your head." She writes about the fact that, "Home buyers seem to ignore what they can afford and focus instead on what they think they somehow deserve in today's badly beaten market."

We are in a great period of time, plainly stated. We are in the period of optimum affordability. We are going to be able to reflect on this time and realize that this was the point in time where prices and rates were at their lowest, hence, the period of "maximum affordability."

Even if real estate prices drop another 3-5%, we will see the rates rise due to the activity in the bond markets. The greatest indicator of what the 30-year rate will do can be tracked by the 10-year bond. By viewing the history over the last month, anyone can see why mortgage rates escalated. The rates are certain to rise faster than they will decline. Each scenario is different, so do the math. Make sure that the monthly savings of low rates makes sense to accepting another small decline in market values.

The Federal Reserve is still poised to purchase $600B in bonds by June, 2011.  Its effects on rates could be favorable to potential buyers and those refinancing. For those refinancing, you may have missed out on the lowest rates, but it would not hurt to prepare for another opportunity for reduced rates. As for homebuyers, I recommend to "lock & load!"

Take a look at the history of rates, stop comparing the deal that your friends get, and focus on your investment and planning strategies. Be grateful, the time is incredibly ripe for real estate purchasing and the borrowing of the least expensive money ever.

How long can this period of Optimum Affordability actually last?