Fixed-rate mortgages hit their highest average level since July 2002 last week, according to Freddie Mac.  Last week ended with the average 30-year fixed rate mortgage at 6.49% -- up from 6.43% the week before.

But signals now being sent by Federal Reserve governors indicate we may finally be seeing an end to the ballooning rates.  That will be good news for the housing industry, which has seen a softening of housing demand over the past few months.  In fact Richard DeKaser, chief economist for the financial holding company National City Corp., believes the softening “will continue and may likely accelerate.”

Good news for home buyers and sellers is that yesterday two Fed governors spoke publicly signaling that the Fed may soon halt interest rate increases.  Fed governor Donald Kahn told an Oklahoma City audience, “The economy is in transition to a sustainable pace of growth, in which case policy likely will be in transition as well. I do not know how much policy firming" (translated -- additional rate increases) "will be needed."   Fed governor Susan Bies told reporters after a Los Angeles event, "We are getting closer to the stopping point."

So will we see another interest rate increase when the Fed meets May 10 or not?