It is my opinion that if the 30 year mortgage rates hit 6%, all bets on a recovery are off.  If the market is anemic at best at the historic low martgage rates of 4.75% it is not going to move at all at 6%.  We will go backwards, and real estate prices will fall more quickly, sales will drop and we are back to square 1!  If there is any chance of recovery in this economy it will come from housing. Until the housing bubble exploded and the bubble burst... over 60% of GDP was driven by housing.  That is no longer the case, and as a nation we are in pretty dire straights.  

In my market I have seen a modest increase in some activity and sales are occurring again.  The reason why the activity has only increased slightly is the fear that is in the market.  Layoffs, rising unemployment, and rising gasoline prices are not a reason to rush out and take on new debt.  The only reasoon there is any activitywhatsoever is that sellers are now willing to negotiate is because of lower mortgage rates.  

With low mortgage rates all things are possible, even if the recovery is slow, it is possible.  Builders that can unload their bloated inventory can more forward, homeowners that are over-leveraged will be allowed to rightsize, and buyers can afford to buy the home of their dream with a 30 year fixed payment!  With lower lending costs...companies and corporations can refinance their finance terms and hiring could begin with an increase in cash flow.  But that is all conditioned on rates staying low.  However in the last week, movement has started pressuring the price of bonds...and they effect our rates.  The rise in bond yeilds are a natural reaction to the government creating money that does not exist.  So it pretty much inevitable....rates are about to start rising due to pressures in the free market, and the government will not be in a position to lower them.  The rate rise is a direct result of free market pressures trying to correct an imbalance. The government interference in free markets has caused this dilemma.