Well, they are certainly trending up now, aren't they. So, my take is, it depends. I hope we've all learned our lesson about prognosticating with regard to the real estate market or mortgage interest rates.
The mortgage industry has been speculating for years that rates are going to skyrocket. They haven't. So, I suspect there will be a steady increase, hopefully not too fast so as to cool down the buyers and, therefore, the market altogether.
Could you imagine how much more crazy this market would be if rates were still at 3.75? Yikes! In many ways I welcome rising interest rates to stop this hyper appreciating market and get us back to normal.
A lot will depend on the Feds (of course) and if they will continue to purchase bonds. We know that they decided to continue this fall.
Besides stating the obvious which is we can not be 100% certain I would be shocked if interest rates go down over the next several years...just way too much money getting thrown into the system. Defining "normal" is tough, but I think once we get to a more stable 1-4% yearly increase in home prices then interest rates should hopefully stabilize. My best guess is the mid 6's.
Which just means we will have a crazy period where assumable mortgages get talked about a lot with all those wonderful FHA buyers who were lucky enough to buy under 4%!