Just recently, we were celebrating the fact the interest rates dropped sharply.  I even posted a picture of people jumping for joy dressed in their business suits.  As I said then, it was a time to refinance. 

Two weeks later and the tune has changed as interest rates moved higher by as much as a quarter point at some Hawaii banks. 

“Mortgage rates followed Treasury bond yields higher this week amid market uncertainty over the current state of the economy,” said Frank Nothaft, Freddie Mac’s vice president and chief economist. “Compared with last Thursday, 10-year Treasury yields are up about 0.3 percentage points, and 30-year fixed-rate loans moved up about the same amount.”

This isn’t to say that 5.625-5.75% isn’t low, cause it is, but with the trend is to head higher.  Here is the NAR’s prediction for interest rates:

• Average 30-year fixed mortgage rate in December: 6.1%

• Average 30-year fixed mortgage rate by mid-2009: 6.5%
• The next Fed policy change: a rate hike in April 2009.