Even if the loan adjusts upward next year, the amount ARMs are allowed to rise is typically capped at 2 more percentage points. If that happened, the interest rate would be at 7 percent at most -- no higher than the fixed-rate loans,

Reconstruction efforts are going to place upward pressure on construction material, and this could add another two percent to three percent to new home costs in the coming months, but should be balanced out by slightly lower mortgage rates.

Our January forecast calls for a gradual rise in long-term rates throughout 2006. This should induce some slowing in housing market activity.

Despite the gradual rise in mortgage rates over the last two months, housing starts were actually up in September highlighting the resiliency of the housing market, ... As a matter of fact, housing directly contributed to real GDP growth of 19 percent in the first quarter of the year and 23 percent in the second quarter.

Adjustable-rate mortgages (ARMs) were more strongly affected by the latest Federal Reserve rate hike this week. However, mortgage rates continue to be extremely affordable and the outlook for the housing sector appears bright.

Mortgage rates this week are at seven-month lows and teetering on the 45-year low levels of last summer,