I know that headline sounds like a joke, but this is what the pundits want you to believe. The banks are ok because housing is going to be fine, just let the government interfere a bit more and they can fix that problem as well. With their normal efficiency. Sorry - not going to happen - we have a long way to go, median prices need to fall a long way (What Should Median Home Prices be Today?) Remember the truth -> any "pickup in sales" you see in the hardest hit states are dominated by foreclosures - which are pricing way below the "market". Only when sellers come to grips that they won't be getting their dream prices, and find willing buyers in scale will their be "market clearing" prices and non foreclosure homes be trading in large volumes (note if you live in states like Texas or Wyoming this conversation mostly does not apply to you) ;)

And, the higher mortgage rates go - the more expensive it gets (i.e. you can afford less home). So prices must fall even further as the monthly mortgage payment covers less principal and less interest. We've been spoiled by historically low rates in the "Easy Al (Greenspan) era" - even at 7% rates would be quite low by historical nature. But we've been addicted to the 5% (6% in the 'worst of times') era.

But please, go buy bank stocks because the housing market is shaping up for a rebound - it's imminent in fact (6 months out - or are the guys who told us Spring 2008 now pushing for Spring 2009? I don't know - eventually if they keep guessing they are going to "nail" the call)

• Mortgage rates are rising because of the troubles at the loan finance giants Fannie Mae and Freddie Mac, threatening to deal another blow to the faltering housing market. Even as policy makers rushed to support the two companies, home loan rates approached their highest levels in five years.