Nobody knows the answer to that question, although many will give you an opinion. There is much wasted energy on this topic relating to real estate. Traders who make their living trading bond futures on a daily basis end their day with no exposure to interest rate changes. Why? Simple, they don't want the overnight risk because they absolutely do not know if interest rates will be higher or lower the next day.

Here is good advice. Find a home you like and can afford at todays rates. If you will be there short term (3-7 years), consider a 5 or 7 year ARM. If you expect to be there longer than 7 years, go with a 30 year fixed rate mortgage. Don't get caught up in day to day changes in rates. If $20 per month is going to put you over the edge, then you should be looking at a home that is more affordable.

If rates fall, you can refinance and lower your payment. If they rise, you'll be glad you bought when you did and didn't wait until rates got lower. It's really pretty simple.

Have you seen this Rate Trend Survey? It is a survey of over 250 lenders and is updated weekly...
http://mortgage-x.com/general/rate_trend.asp

Not saying it's anything more than interesting.............

I only bet once a year in Atlantic City, but if you want my educated guess, I'd say neither. Give or take 1/2 a percentage point, this is where we'll be for the duration of the recovery, then up.
Jo-Ellen