A positive spin on increasing interest rates?

If you haven't heard, the feds this week increased interest rates again. How better for Greenspan to end his legacy at the Federal Reserve than to stick it to the real estate market. Not that he isn't justified with inflation ticking up along with wages (though productivity is down).

I got the most curious email from a mortgage broker the other day. In his email newletter was a feature article that attempted to put a positive spin on increasing interest rates for current mortgage payers. It stated that higher interest rates benefited debt payers, especially those with variable rate mortgages, because as interest rates go up their rate in their savings account goes up. As they make more on their assets this will put them ahead of the interest their paying for their liablities (mortgage, credit cards, etc.). I'm not in the banking business, but I'm pretty sure banks make their money on the spread between what they pay to savings account depositors and the return they get when they loan out those monies (plus fees such as points, late fees, etc). Banks are in the business to make money off consumers, not the other way around. Plus the savings rate in this country is negative, the first time thats happened since the great depression. For most, any cash they had in their savings or cd's has gone into their home. I consider the home the new ATM machine. With no free capital to offset the increases in debt servicing (as credit card and variable rate mortgages payments rise), consumers are screwed. Even homeowners with low fixed rate mortgages who bought their homes a while ago can only expect a downside from higher interest rates as price begin to drop. The only thing that could save the debt payers is an increase in earnings and wages. This increase needs to outpace the increase in interest payments.

The only ones who benefit from higher interest rates are banks and the smart money investors.