Are mortgage rates on the sustained upswing heading into 2010?

It would appear that’s the case this last week of the year. As measured by the BankingMyWay Weekly Mortgage Rate Tracker, rates on both 15- and 30-year mortgages are up, up and potentially away.

For the week, 15-year rates are up to 4.66% from 4.53%; while 30-year rates are up to 5.23% from 5.14% and variable-rate mortgage are a mixed bag.

One-year adjustable-rate mortgages are way up to 5.42% from 4.04% — in one week. Three-year ARMs are up to 4.44% from 4.37%. Meanwhile, five-year ARMs were down to 4.38% from 4.44%.

What’s the back story? In a word (actually two) the bond market. For most of the year, bond investors have gotten the back of the financial market’s hand, and they’re getting sick and tired of it. It’s about time, bond investors believe, that they should get more out of government debt than they’ve been receiving in terms of bond yields.

After all, big banks and investment firms got their bailout, especially in the form of cheap money on lower interest rates. Now it’s our turn, the bond market is saying.

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That’s why many bond market observers expect bond yields to go up in 2010, and take mortgage rates along for the ride.

David Greenlaw, the chief bond economist at Morgan Stanley, has come out with a report predicting that yields on 10-year Treasury notes will rise by 40% to 5.5% in 2010. That should fuel an accompanying hike in 30-year mortgage rates up to 8%, making geniuses out of the homebuyers and refinancers who got in under the 5% interest rate wire in late 2009.

We saw a little bit of that today as yields on 10-year Treasuries rose to 3.84% from 3.8%, according BGCantor Market data. Ten-year T-notes have seen an increase of about 65 basis points this month alone, lending credence to Greenlaw’s prediction.

The last time we saw mortgage rates in the 7.5% to 8% range was back in the year 2000, when the Internet bubble popped and the country slipped into a recession. Granted, the most recent trend of upward-moving rates is only four weeks old. But the wheels of the bond market roll slowly forward, and once sent in motion they grind away.

Locking in a good rate now looks more and more like a good idea. To do so, turn to the best search engine on the Web — You’ll find the best rates, and you’ll find them easily. As we’ve been saying throughout the month of December, rates won’t be low forever, so take advantage while you can.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at