Freddie Mac's own economic forecast calls for a mild and gradual increase in 30-year fixed-rate mortgage rates to about 6 percent by the end of the year. Low mortgage rates will sustain a brisk housing market, leading to record home sales and single-family construction this year.

So far this year, fixed-rate mortgage rates have risen only slightly. Long-term mortgage rates are only marginally higher than they were two months ago.

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.

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

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.