Now that mortgages rates have dipped below the magic 6 percent barrier -- they fell to 5.99 percent last week, a level that hasn't been in more than 40 years -- the only question is, how low can they go?

At least one housing economist thinks there's "a real possibility" the trend could keep going until loan prices bottom out at 5.5 percent or so.

And if that happens, said Eric Belsky, executive director of Joint Center for Housing Studies at Harvard University, said at a recent conference in Newport, R.I., hold on to your cell phones and pocket calculators, boys and girls. The roof is about to fly off.

"If the market coughs up another 40-50 basis points," the economist told the New England Mortgage Bankers Conference, "we're in for a refi boom the likes of which have never been seen before."

As many as seven out of every ten loans now on the books could be "rolled over again," he predicted.

Belsky warned, however, that lower rates are far from a sure thing. Indeed, he cautioned that while the economy is in a dead stall in uncertain waters with "lots of rip currents" are on the horizon.

So far, it's been a "perfect storm" for housing, he said, continuing the nautical metaphor that is appropriate for the seaport village venue where he spoke. The recession has been mild with relatively little in the way of job losses, mortgage rates are at a 40-year low because of the collapse in the stock market, and money is rushing in bonds.

"The wind has been a housing's back for sometime," the Harvard economist said. "Everything's popping on all cylinders. Housing has been the anchor for the entire economy, but who knows how long it will go on."

The most difficult question to answer is how long consumers can keep hanging tough, Belsky said.

"It's amazing that (consumers) are still spending, but they are. They're not just putting their money under the mattress. They're investing and they're borrowing, which, at today's rates, is the smart thing to do," he said.

But in what he called an "ominous" sign, he noted that the savings rate has popped up to the post war average, a signal perhaps that the winds are finally beginning to shift.

One key to what the future holds is the "important" holiday season, the economist said. Another is the stock market.

If holiday sales are brisk, it means consumers are not yet ready to batten down the hatches, he explained. But if the stock market rebounds, interest rates will rise quickly and all bets are off.

"Consumers will continue to buy houses and refinance mortgages until interest rates start rising," he said. "And rates can run up really fast."

Belsky also is keeping a wary eye on employment figures. "If job losses rise dramatically," he said, "consumers can't keep going and we're in for some real trouble."

The Harvard economist said the business sector is another wild card in the murky economic seas. Currently, he said, business is nervously focusing more on the accounting scandals than on spending and investing.

The sector also is finding it difficult to drive through price increases because of global over-capacity, he added.

Published: October 2, 2002

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.