Rates are going up. The media is broadcasting it loud and clear; but it is said with such gloom.  "Mortgage rates are going up so this will discourage buyers from purchasing homes.  How will this help our economy?  Many current homeowners will not be able to refinance."

Not so fast.

First let's talk again about WHY rates are increasing.  Mortgage rates improve with negative news, increase with positive news.  For those that missed my November 16th posting, here is a quick recap:

• Retail Sales made a 2-year high in October
• Existing and New Home Sales showed big improvement in September
• Jobs growth returned in October

Because consumer spending accounts for two-thirds of the economy, spending growth leads to economic growth. But it's been a lack of growth that has kept mortgage rates this low.

Even though rates have been at or near all-time lows for quite a while, many have not refinanced or purchased due to lack of income, lack of confidence in their current employment or home values.  Let's face it, the economy and outlook has been pretty dim.  We need the economy to improve, employers  to hire and the real estate market to stablize.  All of this requires cosumer confidence AND spending.  Unfortunately, this also leads to higher mortgage rates.

So where does this leave us?  It puts us all in a better long-term position.  More Americans are working, earning a living and able to afford their current mortgage or a new mortgage. 

Let's remember the "good days" of 2004-2007.  The 30-year average mortgage rate posted by  Freddie Mac dropped below 5.50% one time and that was in February 2004.  Rates were above 6.0% for all of 2006 and 2007; reaching a high of 6.70% in July of 2006.  This was at the HEIGHT of the boom! 

I will admit that I hate to see rates increase as it provides a great opportunity for those that can afford and qualify for a home loan.  But I would rather see rates move a point or to up if that opens the opportunity for more to have the confidence and income to obtain a mortgage. 

Here is my thought for the day... If you are in a position to refinance or purchase, do it now.  They days of 4.0% 30-year fixed rate mortgages I think are gone.  There will still be volatility in the market and we may see them dip a bit, but I don't see them going back to where we were just a month ago.  If you were waiting for the rates to hit rock bottom, you missed it.  If you are waiting for prices to hit rock bottom, how will you know until AFTER they start to go up?  A lower priced home could cost you way more in the end with a higher interest rate.

For those that cannot buy or refinance just yet, hold on to the thought that things are improving.  That is what we all need for the long haul.