Mortgage interest rates are on the rise, according to Freddie Mac's Primary Mortgage Market Survey, which showed 30-year fixed-rate mortgages averaging 5.94 percent and the average for a 15-year fixed-rate mortgage at 5.76 percent. One-year Treasury-indexed adjustable-rate mortgages averaged 3.67 percent. While still below figures for last year, these rates represent an increase in the past few weeks.

"Mortgage rates rose again for the third consecutive week, bringing long-term rates to about the same levels we saw at the start of the year. This may start to apply the brakes to the frenzy of refinancing that we are currently experiencing," said Frank Nothaft, Freddie Mac's chief economist. "Purchases of homes remain strong, though."

Although everyone is still trying to estimate the status of the economy, interest rates are playing a key role.

"Federal Reserve Board Chairman Alan Greenspan told Congress that he's optimistic that the economy will take off in the second half of this year. This was seen as a sign that there was no more need for any additional rates cuts," Nothaft said. "In response, bond yields rose dramatically, taking mortgage rates up with them."

Further good news came when the National Bureau of Economic Research declared the 2001 recession officially over, confirming that the economy is in recovery. "Housing played a big part in the shortness and shallowness of the recession and continues to fuel the recovery," Nothaft said.

Jimmy Kang, senior home mortgage consultant with Wells Fargo Home Mortgage, is seeing a definite increase in activity due to the rise in rates.

"A lot of borrowers and buyers have been hesitant to commit to either buying or refinancing as they try to second-guess the rates. Some were given the false impression that the rates were going even lower, even though the fundamentals did not warrant lower rates," Kang said.

In fact, Kang said the underlying economic activities indicate a buildup of movement back to stocks and other major items, such as autos, homes and capital investments for business.

"I predict that when the economy does recover, it'll be very quick. As a result, most elderly homeowners are refinancing to 15- and even 10-year fixed-rate programs. However, the upwardly mobile borrowers are actually thinking of trading up at this time, given low rates and low prices," Kang said.

Commercial Investment Broker Michael Shields with Coldwell Banker Commercial believes low interest rates make investment property more attractive.

"Debt service is typically the largest expense, operating or otherwise. By reducing the debt service one can dramatically improve the annual cash flow. If all other expenses are kept in check this will dramatically improve the bottom line. Spread over the life of an investment, the reduction in interest rates can result in tens of thousands of dollars of additional profits," Shields said.

Shields said a number of his clients have taken advantage of the lower interest rates by exchanging their current holdings. The lower debt service makes a higher purchase price feasible, since the return on investment will be greater due to the increased cash flow.

"Investors who are sitting on the sidelines waiting for the perfect property are missing the opportunity of a lifetime," Shields said. "Many properties have problems. The trick is to identify and forecast the problems prior to acquisition. With an understanding of the cost of the potential pitfalls, an investor can weigh this cost against the reduced debt service."

For those not familiar with the methodologies used to accomplish this, Shields recommends consulting with a qualified investment broker. Shields is practicing what he preaches and plans to buy two or three properties within the next six to 12 months. "We may not see rates this low for another 40 years," he said.

Realtor Dale Klippel of Prudential California Realty thinks interest rates have brought on an extremely strong selling season. He sees a great deal of interest in move-up buyers, those looking to add property to their personal portfolio and those looking for investment property.

"Real estate remains one of the few bright spots within our fairly poor economy," Klippel said. "It's really hard to tell at this very time and place if our rates have hit rock bottom, but the overall feeling within the real estate family seems to be just that. We have witnessed some upward movement already."

Even if the prime interest rate is lowered again, Klippel does not think an adjustment in real estate rates is likely.

"Tomorrow is just around the corner and that's when the milk has spilled and the tears begin to flow. Find yourself a Realtor and get started."