Higher. Because rates fell to such an unusual low near 4 percent (as the Federal Reserve worked to stop the real estate meltdown), up is pretty much the only direction they can go. To economists, the big question is how much and how fast will mortgage rates rise. It won't necessarily be a large or rapid increase in 2011. Many forecasts call for roughly 5 percent interest on the typical 30-year fixed-rate loan. By 2012, rates may jump to 5.5 percent or even 6.5 percent, economists say.
Economists see rising rates as putting downward pressure on home values because people can't afford to bid as much, but at first, rising rates may boost demand for homes a bit, as buyers seek to lock in good deals.
