I just did a radio interview with a station out in Los Angeles. The topic was, of course, about interest rates and the mortgage market in general. Another guest on the show was a Financial Planner that was also going to give his two cents. Or one cent, depending upon your perspective. The host of the show asked us both, "So, rates are at some of the highest levels we've seen for a couple of years … what will that do to the housing market?"

Now, me being a Texan, I minded my manners and let the other gentleman speak first. "Well," he began "it doesn't look good at all. Rates are up nearly .5 percent since earlier this year and that means thousands of additional dollars the homebuyer will have to pay." Apparently he did some math beforehand because he continued with, "On a typical $500,000 loan (this is California, remember) an extra .5 percent means another $160 more each month in payments. Over 30 years, that means another $57,000 over the life of the loan. Home prices are high enough without this."

What a nerd. Yeah, rates have gone up, but gone up from what? From record lows, that's what. Let's not get too spoiled here. 30 year fixed rates used to be in the high sevens and low eights way, way back in what -- September 2000? Give me a break here. Just take any historical mortgage rate chart and you'll see that compared to rates going all the way back to the Paleolithic period we're still in pretty good shape. And I think it's irresponsible for so-called "pundits" to tell people how screwed they'll be if they buy a house right now.

The "housing bubble" we've been reading about could also be a self-fulfilling prophecy if we're not careful. An interest rate goes from 6.00 to 6.50 percent and the sky is falling? Yeah, yeah I know. "But David, that knocks a lot of people out of homeownership." Fair enough, but buy a smaller house, I say. Instead of a $300,000 loan, get a $285,000 one. That's the typical qualifying difference between 6.00 and 6.50 percent.

"Well, David, much of the market now is for investment homes … we can't kill that." Okay. But nobody's killing anything, the market's simply adjusting. If people want to buy investment properties they're going to have to buy fewer or smaller ones or negotiate a better deal. Heck, any good Realtor can do that one for you.

It's just that I get steamed when an "expert" predicts disaster and encourages people not to buy something because of an interest rate move. And a small one at that. Will there be fewer homes sold in 2006? Probably. But fewer than what? 2005? 2004? 2003?

I suggest we all kick back a little bit and understand that often when consumers read an article or listen to a radio show that just sometimes they might actually be paying attention. "Gosh honey, may be we shouldn't buy that home after all. That guy just said we'd lose $57,000."

Fair debate and honest discussions are one thing. Scaring consumers is quite another.

Published: November 18, 2005

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, a veteran Mortgage Banker, successful Real Estate Consultant and author of Your Guide to VA Loans, Mortgages 101: Quick Answers to Over 250 Critical Questions About Your Home Loan, Who Says You Can't Buy a Home!, and Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You, is a former columnist and Contributing Editor with San Diego-based Mortgage Originator Magazine. Reed is President of CD Reed Mortgage Bankers, Austin, TX and is a Past President of the Austin Mortgage Bankers Association.