Low interest rates — they’re the hot topic of conversation almost anywhere you go. But lately the question I hear asked most often is how long will low interest rates last?

The answer is that “low” is an extremely relative term. Back in the 1980s when interest rates were around 13 percent for a 30-year fixed rate mortgage, 7 or 8 percent would’ve been considered ideal. But now, with interest rates hovering between 5 percent and 6 percent —7 percent or 8 percent seems unthinkable. After last week’s slip in interest rates, Freddie Mac reported the 30-year fixed rate at an average of 5.91 percent and the 15-year fixed rate dropped to 5.31 percent. The average interest rate on a one-year adjustable rate mortgage dropped to 3.93 percent (rates are with an average 0.6 point; reported on 1/24/03). This is the fifth week in a row that the 30-year rate has remained below 6 percent, but everyone’s wondering, how long can it last?

Economists are predicting “low” interest rates throughout 2003, although many have revised their initial forecasts to suggest that rates will remain low for longer than they had originally anticipated. Some are now suggesting that rates will remain around 6 percent for the next eight months and will not begin to rise until the end of the year. The National Association of Realtors expects the 30-year fixed mortgage interest rate to remain below 6.5 percent through the middle of 2003, rising gradually to 6.8 percent by the end of the year.

To some of you I know this sounds high, but it’s important to keep things in perspective — 6.8 percent is still a very attractive interest rate for homebuyers. And so is 7 percent for that matter. As I see it, the interest rates that we currently have are phenomenal, plain and simple. In fact, they’re something of an anomaly, which makes this an extremely unique moment in time. When interest rates eventually do rise to between 6 percent-7 percent, they’ll be fantastic. And when they rise again to between 7 percent-8 percent, they’ll still be great.

Few ever expected interest rates to drop as low as they are right now, but due to slow economic recovery and the threat of war, the downward pressure on rates has continued. What has resulted is unparalleled opportunities for refinancing and home buying. Following record setting numbers of refinancing applications in 2002, Federal Reserve chairman Alan Greenspan says that he anticipates high levels of refinancing to continue into 2003. David Lereah, chief economist for the National Association of Realtors, adds that after setting new housing sales records in 2002, 2003 is expected to be another strong year in residential real estate sales. This is important because both these items have been critical to supporting our economy—and they will continue to do so over the next year.

The point to all of this is that nobody knows for certain what interest rates will do in the coming year, but there’s no need to panic. The pressure that many homebuyers feel right now to take advantage of low interest rates is understandable considering the savings to be had, but remember that low interest rates are relative. If circumstances are forcing you to hold off on buying at this stage, rest assured that by the end of the year interest rates are still expected to be below 7 percent, which means that excellent opportunities for homeownership still lie ahead. And remember, if interest rates should drop again down the road, you always have the option to refinance.

(Editor’s Note: J. Lennox Scott is the Chairman and CEO of John L. Scott Real Estate. You can visit his Web site at www.johnlscott.com.).