Mortgage Rates on the Rise

First, this could be bad economic news--insofar as rates have bottomed out and are now on the uptick, which could slow home buying and refinancing. However, I would note that they are hardly soaring. I would guess that there will still be at least a final flurry of refinancing and purchasing, as those who were waiting to refi, or waiting to buy, on the hopes that the rates wold continue to tumble, will jump now before the rates go up any further. Whether this is going to be a long-term problem is predicated on the health of the rest of economy. Clearly, low mortgage rates and such could not persist forever.

If cheap mortgages have kept the economy afloat, the economy may have just sprung a leak.
A little more than a month after the Federal Reserve reduced its overnight lending rate to just 1 percent, mortgage rates have shot up as investors have soured on the bond market--in part because of confusion about the Fed's intentions in managing the economy.

Second, this all goes to show how such thing are relative, as even with the upward swing in rates, they are still near historic lows. Of course, since I refi'd at 4.5%, I guess it is easy for me to be relaxed about the whole thing.

Interesting:

Rising interest rates also affect the Federal government's growing budget deficit, which the Bush administration expects to reach $455 billion this year.

Though many economists contend that big government deficits eventually lead to higher interest rates as the government begins to crowd the markets with its huge borrowing needs, most analysts say the recent surge in interest rates is not a result of the newest news on deficits.

Analysts say the increase in this year's expected deficit is tiny compared with the total credit market, and they note that investors were already expecting this year's deficit to exceed $300 billion.

And, an amazing stat:

the nation's mortgage lenders, who are responsible for more than $5 trillion in home loans.

The article's discussion of how various markets and the actions of those buying and selling in those markets, affect the whole system is quite interesting.

Source: Surge in Rates May Hurt Pillar of the Economy