The Federal Reserve released a new policy announcement today.  This is one of the 8 times per year where the Fed can opt to change “rates,” or adjust its other policies that impact “rates.”  Fed announcement days have a track record as being some of the best (or worst) days for mortgage rates.  That said, they can be completely meaningless as well, and that’s the designation we’d pick for today’s version (if we could only pick one).

Is it true that the Fed kept rates unchanged at 0-0.25%?  Yes, but it’s important to understand that refers to the Fed Funds Rate–a target rate for overnight lending between big banks.  Mortgage rates can loosely correlate with the Fed Funds Rate over very long time horizons, but they frequently move in the opposite direction.  More importantly mortgage rates are constantly moving whereas the Fed Funds rate hasn’t changed in more than a year now (and is only usually capable of changing once every 6 weeks, outside of extraordinary circumstances).

…(read more)

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.