Given the reaction in some quarters, mortgage rates at 6.01 percent plus .7 points are apparently an example of financial shock and awe, the first hint of oncoming economic depression, bursting housing bubbles, and looming currency devaluations.

Relax. The fact is those allegedly-worrisome 6 percent loan levels are ludicrously cheap by the standards of recent decades and cheaper even than mortgage rates last year. The time to worry is in the future, a time which may not be so far away.

But first, the good news.

In June, 2003 we saw the lowest mortgage rate in 45 years -- 5.21 percent plus .5 points . Now we've just topped 6 percent. Seen another way, rates have risen a total of .8 percent since the 2003 record low, a performance which seems delightful when considered against past eras.

Let's compare some numbers. Figures from the Federal Reserve show that lucky homebuyers in February 1982 faced 17.6 percent interest levels for fixed-rate, 30-year financing. More recently, interest rates last May (6.27), June (6.29), and July (6.06) were all higher than last week's interest quotes and the country did not crumble.

A lot of folks, me included, thought rates this year would be significantly higher given the massive federal deficit, our woeful balance of trade problems and the OPEC tax, those higher oil prices. With this view, the great financial miracle of our day is not that mortgage rates have again reached 6 percent, it's that they're not substantially higher.

However, despite the good news to date there are discomforting signs which were not in the economic picture a year ago.

Both Korea and Japan have recently announced that they will purchase a variety of currencies; not just dollars. You can't sugarcoat what this means: To entice major government purchasers of U.S. debt, we will have to offer something attractive, say higher rates.

Meanwhile, China continues to pile up U.S. dollars, something which should make us nervous both economically and politically.

The Federal Reserve has now raised short-term interest rates for the seventh time in a row. Such a change does not impact mortgage levels directly, but it does suggest that the Fed sees inflation ahead and wants to moderate or stop that trend.

Unfortunately, the mere threat of inflation will cause mortgage investors to demand higher rates and -- in a circular fashion -- by seeking higher mortgage rates, another inflationary pressure will be created thus "justifying" higher rates. In effect, the Fed's action is almost self-fulfilling.

So much for the good news...

One reason interest levels have stayed low is that foreign governments who hold so much of our debt, do not want to quickly unload their dollars. Dump dollars and the rest of the pile in foreign vaults is instantly devalued. Thus, in an odd way, our creditors are financial hostages hoping we will not do anything to make the situation worse. Their best hope, and ours, is for a gradual rise in U.S. interest levels.

Looking ahead you have to ask: Will the budget losses stop? Will the balance-of-payments picture improve? Will we spend less on gas? If you gave a hearty "no" to each of these questions, then why should rates fall?

As a country we have a tremendous need to engage in economic self-discipline. The tax structure has to generate more money; we have to import less and export more, and government at all levels has to be more responsible.

My local government, for example, has just announced a budget that's 8 percent higher than last year. These are the same folks who say that landlords, voluntarily, should not raise rents more than 3.7 percent in 2005. Right.

It's difficult to look ahead and not see higher rates. That we have managed to avoid sharply-higher interest levels to this point is surprising -- and lucky. But luck can only last so long, the time must come when our collective lucky streak ends.

Last September, Freddie Mac's chief economist, Frank E. Nothaft, said that only one mortgage in seven had a coupon rate above 7 percent. In other words, most of us have used the period of low rates wisely, financed and refinanced to cut monthly costs, and dumped high-cost consumer debt in favor of loan-cost mortgage financing.

Because so many people are financially dug-in, as mortgage rates rise you can expect a fall-off in both refinancing volume and home sales. Such trends will also stall additional rate rises as more capital becomes available relative to demand.

The public understands what's going on. Just as you would expect, new home sales (and new loans) are having a strong burst before rates rise higher: The National Association of Home Builders reports that in February, new home sales rose 9.4 percent from a year earlier. Meanwhile, existing home sales dropped a modest .4 percent according to the National Association of Realtors -- a sales pace which makes sense if you want to hold onto low-rate financing. (And a sales pace which also makes sense given that existing home prices rose 11 percent in the past year to $191,000.)

Ultimately rates will rise. Seriously rise. And when that happens, 6 percent financing will look like the bargain of the decade. In effect, today's rates may not be at the absolute bottom of the range and they are surely not 5.21 percent, but they are lower than where we may be in the near future. It is for this reason that 6 percent should not be ignored by those who need to buy or refinance.

For more articles by Peter G. Miller, please press here .