An important commentary from Freddie Mac's Chief Economist today provides an argument that says yes. His argument is predicated upon recent data that shows retail sales in November were better than expected demonstrating continuing economic strength and that therefore it is less likely that the Federal reserve will cut rates anytime soon

"What is interesting to note is that the 30-year (fixed-rate mortgage) this week is one-eighth of a percentage point lower than the 30-year (fixed-rate mortgage) was at this time last year," said Frank Nothaft, Freddie Mac vice president and chief economist. "This could bode well for housing in the new year, and indeed we have seen a spike in refinancing activity over the past few weeks as rates have come down. Borrowers who have ARMs that are scheduled for a rate adjustment in 2007 may want to consider refinancing those loans now to take advantage of the lower rates currently available."

As we noted in recent weeks, Merrill Lynch and UBS have forecast lower interest rates in the first quarter of 2007 and disagree with the above. We will keep you apprised as the data rolls in.