Based on all economic indicators interest rates will HAVE to start moving upward in the relatively near future.

In the recent months/years there have been several factors that have kept interest rates low: Starting on 2001 after the Sept 11 slowdown the Fed started cutting interest rates which brought down mortgage rates & helped stimulate the housing market. 

At that time there was a feeding frenzy & everyone knows about the resulting housing boom that lasted 5-6 years. During this time interest rates stayed low mainly due to the insane amount of real estate transactions happening during those years.

In early 2005 the Fed started raising the key interest rate again, but that was in the midst of the housing boom & interest rates were only slightly affected.

Throughout all this China's voracious demand for American bonds helped keep interest rates low as well.

Once the housing boom started slowing down & the economy came to a screeching halt the Fed once again started slashing the funds rate & is now effectively at 0%.

What's happening now is China has a severely reduced enthusiasm for buying our T-Bills, there is a huge amount of debt that needs to be funded, & the Fed is going to have to raise their rates to make it more attractive for investors to fund the deficit.

In the midst of all this, mortgage lenders aren't going to be satisfied with a paltry 5% return on their investment & in order to keep pumping money into the mortgage market they'll want a higher return on their investment aka higher interest rates.

No one knows when this shift will come, but know it will & when the upward trend begins I believe it will be a steady uphill climb & will last for an extended period.

If you look at the last 30 years you'll see a history of dramatic rises: Interest rates well into the teens.

In closing I'll say, Buyers need to get off the fence & purchase a home now - These are ideal conditions for a buyer....extremely low interest rates along with home prices that have fallen dramatically. Now's the time to move!!

Don't let there be a feeling of regret in looking back to these days & wishing that you had moved on 5.5% interest rates.