By June 9, mortgage interest rates had fallen 10 times in 11 weeks, and there's a good chance they haven't hit bottom, if related mortgage market forecast changes are any indication.

The latest downward trend caused Freddie Mac to lower its forecast for long-term rates approximately 10 basis points or 0.10 percent. It now projects 30-year, fixed-rate mortgages will average 5.9 percent this year, instead of 6.0 percent, and 6.2 percent in 2006.

For the first time in five weeks, interest rates did tick up the week of June 16, with the 30-year fixed-rate mortgage averaging 5.63 percent nationwide, up from 5.56 percent June 9, according to Freddie Mac. Rates in the West are often 10 basis points lower.

Even though rates rose, they remained below the average for all of last year (2004) and below where they were in 2004 at the same time, said Frank Nothaft, Freddie Mac vice president and chief economist.

Only slightly less bullish, David Lereah, National Association of Realtors' chief economist, predicts by year's end, rates should rise to 6.1 percent and reach 6.5 percent by the end of 2006.

"Not only have mortgage interest rates declined, but an expected rise in the second half of the year will be slower than in earlier projections," he said.

So far this year, rates have averaged about 5.75 percent--which could become the lowest annual rate on record if it sticks. Rates reached a high point this year back on March 31 at 6.04 percent. Given forecasts call for less than half a percentage point increase in the current rate, that gives rates plenty of room and time for rates to perhaps move nearer the mid-June 2003 record low of 5.21 percent, before they lock in on an upward trend.

If history repeats, there won't be any upward trend. In the past decade, mortgage interest rates have mostly trended down or remained flat during the last third of the year--which is now just two months away.

But it's not just history.

A growing number of bond managers are also changing their tunes.

Long-term mortgage rates, including those on 30-year mortgages, are largely determined by the yield on the 10-year Treasury bond. When the yield falls, so do long-term mortgage rates.

Last June, when the Federal Reserve's benchmark short-term rate was 1 percent, the 10-year bond yield was 4.69 percent and the average 30-year mortgage rate was 6.25 percent.

Since then, the Fed has raised the benchmark rate, which is charged on overnight loans between banks, to 3 percent and indicated they plan to move it higher to keep inflation in check. Financial experts are not sure why, but as the benchmark has risen, the 10-year bond yield has fallen, at times below 4 percent.

Ever wiser after decades of economic twists and turns, Alan Greenspan, chairman of the Federal Reserve, has been unable to explain the oxymoronic mortgage market conditions beyond labeling them a "conundrum."

The "conundrum" prompted Merrill Lynch's interest-rate committee head, chief economist David Rosenberg, on May 25 to lower his firm's yield forecasts, projecting the 10-year Treasury would yield 3.8 percent by year's end instead of his original 4.4 percent forecast. In another about face, Morgan Stanley's chief economist, Stephen S. Roach, said that the yield could fall as low as 3.5 percent by next year. Citigroup also lowered its forecast, but left it much higher, at 4.5 percent.

Falling mortgage rates bolster demand the real estate industry is banking on to muster home sales and keep them on pace to top 8 million sales (new and existing) nationwide this year, which would be the fifth consecutive home sales record.

"We now expect to set records for both existing and new home sales this year," Lereah said.

The breakdown reveals that sales of existing single-family houses, condos and co-ops will rise 1.6 percent to 6.89 million from 6.78 million last year and new home sales will climb 3.2 percent to 1.24 million, according to NAR's projections.

Because many homeowners have already refinanced with rates near 5.5 percent, should rates fall lower, that also could set off another round of refinancings.

Real estate writer Broderick Perkins, executive editor of San Jose-based DeadlineNews.Com, writes regularly for this newspaper.