Looking to lock a mortgage rate this week? Wondering if you should float your rate instead? I'm a contributor to the Bankrate.com Mortgage Rate Trend Index and this week's survey should give you guidance.

Conforming Mortgage Rate Predictions Only

First, the fine print. These mortgage rate predictions are for Fannie Mae and Freddie Mae mortgages nationwide -- including Cincinnati, Ohio; Potomac, Maryland; and everywhere else.

FHA streamline refinances are not covered because FHA mortgage rates are based on the price of GNMA securities. Furthermore, unique property types including non-warrantable condos in Chicago, condotels in Florida, and loans for investors with more than 4 properties financed are excluded. Same for pay day loans.

for a real-time rate quote.

Breaking Down The Predictions

Here's the mortgage rate outlook for the upcoming week:

• 40% think mortgage rates will increase
• 13% think mortgage rates will decrease
• 47% think mortgage rates will won't change

I expect mortgage rates to decrease.

My advice not be appropriate for your individual situation and I'm not always right. Ultimately, you may find your time better spent researching the HPOA Hoax.

Either way, here's what I told Bankrate.com:

"The Fed set rates back on a downward trajectory."

I'm changing my tune. Mortgage markets are not about to rise. I see them staying at least flat for now.

The Fed Doesn't Make Rates (But It Does Influence)

This mortgage blog wastes a lot of ink on how the Federal Reserve doesn't make mortgage rates. Mortgage rates are made on the mortgage-backed securities market, then "adjusted for consumption" based on Fannie Mae's LLPA rulebook.

The Fed has nothing to do with mortgage rates. At least, not directly. Indirectly, it turns out, the Fed has a lot to do with mortgages.

As the nation's central banker, what the Federal Reserve says -- and what the Federal Reserve does -- ripples through the economy's every nook and cranny. Nothing is unaffected by the Fed and that includes the world of mortgages. So, when the Fed says things like the economy "has slowed" like it did earlier this week, it's only logical that mortgage markets react.

Over the last 36 hours, mortgage rates are down. Expect that to continue.

Beware Of The VIX -- Mortgage Rate Velocity Is Rising

With respect to falling rates, there's a major caveat. Regardless of what the Fed has said, mortgage markets remain tightly wound and scared.

Find your proof in the VIX, more commonly called the Fear Index. The VIX jumped 14 percent today, illustrating the concerns of Wall Street.

When VIX is high, mortgage rates tend to be volatile and rate shoppers tend to get screwed. The last time VIX reached record-levels, for example, mortgage rates rose 1.125% percent in less than 10 days. It was unlike anything I've ever seen.

Therefore, even though mortgage rates are low, it's not a time to wait-and-see.  A turnaround could happen just like <snap>.

Rates Are Falling, But It's Time To Lock In

Mortgage rates are really, really low. Now's not the time to be greedy. Take the bird-in-hand and get started on that refi.

To give an application and get locked, call my office at 513-443-2020. It'll be 4-minute call and I can have a guaranteed interest rate in your hand within an hour. Or, if email is more your thing, and we can get started that way instead.

Either way, it's time to make a move. .

Today, in its first meeting in 6 weeks, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged.

Fed Funds Rate Held Near 0.000%

The Fed Fund Rate remains at a historical low, within a prescribed target range of 0.000-0.250 percent.

In its press release, the FOMC said that, since June, the pace of economic recovery “has slowed”. Household spending is increasing but remains restrained because of high levels of unemployment, falling home values, and restrictive credit.

Today’s statement shows less economic optimism as compared to the prior year’s worth of FOMC statements dating back to June 2009. The Fed is looking for growth to be “more modest in the near-term” than its previous expectations.

Fed Stays On Message; No New News On The Economy

Weaknesses aside, the Fed highlighted strengths in the economy, too:

1. Growth is ongoing on a national level
2. Inflation levels remain exceedingly low
3. Business spending is rising

As expected, the Fed re-affirmed its plan to hold the Fed Funds Rate near zero percent “for an extended period”.

There were no surprises in the Fed’s statement so, as a result, the mortgage market’s reaction to the release has been neutral. Mortgage rates are unchanged this afternoon.

The FOMC’s next meeting is scheduled for September 21, 2010.

Join The Refi Boom Before Rates Rise

Mortgage rates are holding at all-time low levels. Regardless of how long you've owned your home, you may be eligible for a refinance. Talk to your loan officer about a rate quote, or . I'd be happy to get you pricing right away.

(Post adapted from Bring the Blog)

The Importance Of Language

Adjectives play an important role in the English language -- they modify nouns.  Because of adjectives, we can linguistically separate good movies from bad movies, rainy days from sunny days, and sore losers from lovable losers.

Sometimes, adjectives are superfluous.  For example, you know this is a mortgage blog so when yours truly writes "rates are lower", it's implied that I'm talking about mortgage rates. I don't need to constantly say "mortgage rates".

Other times, though, omitting adjectives leads to misunderstandings. It happens nearly every time the Federal Open Market Committee meets.

Here's why.

Explaining the FOMC In Layman Terms

The Federal Open Market Committee is a government group that makes monetary policy. It's job is akin to the gas-and-brake pedals on a car -- speed up or slow down the vehicle that is the U.S. economy.

The FOMC has 12 members and is headed by Chairman Ben Bernanke.

8 times annually, the Fed gets together to discuss a host of economic issues and, when the meeting is done, the members vote on whether to raise, lower, or leave unchanged an interest rate called the Fed Funds Rate.

The Fed Funds Rate is the prescribed interest rate at which banks lend money to each other overnight.

Simplified, when the Fed Funds Rate is high, banks end up paying a lot of money in interest payments and are less inclined to borrow from one another, thereby slowing down the economy. When the Fed Funds Rate is low, borrowing is cheap, and the economy is spurred forward.

Because the Fed Funds Rate is directly related to Prime Rate, the basis of business and consumer borrowing, the FOMC's vote carries huge implications for the economy as a whole.

The FOMC Does Not Vote On Mortgage Rates

The FOMC meets today and adjourns at 2:15 PM ET.  The group is expected to leave the Fed Funds Rate unchanged within its current range of 0.000-0.250 percent.  This is the lowest Fed Funds Rate is history and the Fed has said that the Fed Funds Rate will stay near zero for "an extended period".

However, by 2:30 PM, news stories will surface online about how the Fed voted to "leave rates unchanged" today.

And this brings us back to adjectives -- implied or otherwise.

See, the proper verbiage from the press would be "the Fed voted to leave the Fed Funds Rate unchanged today", but that's not how the headlines will be phrased.  They'll just say "rates".

This is a big deal only because most Americans don't know what the Federal Reserve's true scope is; they never learned what the Fed does for the country, or how it does it. It's the main reason why, in my experience, Americans tend to think that the Federal Reserve controls daily mortgage rates.

It doesn't. But... Because of this misconception, when Americans read about the FOMC and "rates", they just assume the story is about mortgage rates.

It's not.

Comparing The Fed Funds Rate To Mortgage Rates

The FOMC doesn't control mortgage rates.  If it did, the chart at top would be less staggered.

Going back 20 years to 1990, the relationship between the Fed Funds Rate and the 30-year fixed rate mortgage has been indirect, at best.  The spread in rates has been as narrow as 1 percent and as wide as 5 percent.  There was even a period in the 1970s and 1980s where the spread went negative; where mortgage rates were lower than the Fed Funds Rate.

And if you need to know the biggest reason why the Fed Funds Rate is untied from mortgage rates, it's because the Fed Funds Rate is an overnight rate and the 30-year fixed rate is a long-term rate.

Borrowing money is much different over 8 hours as compared to 263,000 hours.

Make A Mortgage Rate Lock Plan Ahead Of The FOMC

It's imprudent to float a mortgage rate ahead of an FOMC meeting. Despite the near-universal belief that the Fed Funds Rate won't be changed, there's always the chance that the Fed says something "good" for the economy, causing mortgage rates to spike.

It's happened in the past and it could happen again.

If you're shopping for a mortgage or otherwise not locked in, talk to your loan officer in advance of the Fed's 2:15 P.M. ET announcement. Rates may not rise, but then again, maybe they will. It stinks to be on the wrong side of that bet.

Or, if you don't have a loan officer, with your details and I'll lock your rate for you on the spot.

Wednesday, in its first meeting in 5 weeks, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged.

The Fed Fund Rate remains within its target range of 0.000-0.250 percent.

The Recovery "Is Proceeding"

In its press release, the FOMC said that, since April, "the economic recovery is proceeding" and that the jobs market "is improving gradually". Business spending "has risen significantly", too, with the exception of commercial real estate.

The June FOMC statement is the 8th straight press release in which the Fed shows optimism for the U.S. economy, dating back to June 2009.  Since last year, the Fed has terminated all of the programs it created to support the economy through the economic crisis.

Also, as expected, the Fed re-affirmed its plan to hold the Fed Funds Rate near zero percent "for an extended period", citing that "inflation has trended lower" recently.

The recession is widely believed to be over.

Despite Economic Growth, Threats Linger

And, although the Fed's June statement acknowledged economic growth, it highlighted lingering threats, too.

1. Employers remain reluctant to hire new workers
2. Household wealth (i.e. equity) is lower
3. Bank lending is contracting

Furthermore, the Fed wrote "Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad."

Translated : Europe concerns us.

That's a big deal for mortgage rate shoppers because as Europe has faltered financially and economically since, the U.S. mortgage market reaped the gains.  Mortgage rates are below the all-time lows of last year and poised to drop more.

Locking Rates : Strike While The Iron Is Hot

Mortgage rates are low and -- as many times as we say it -- they can't stay this low forever. They sure seem to, though, don't they?

It's just, I'm not one to mess with chance and maybe you're not, either. Call in that rate lock today, folks.

With 30-year fixed mortgage rates cutting 4.500 percent, it's not like an extra 1/8 percent dip will change your life going forward.  And I like the idea of a 4.500 rate over the next 30 years, though. How about you?

Lock your mortgage rate with a simple phone call to 513-443-2020, or, save time and just send me an email with your details. I'm happy to get your rate locked right away -- before rates creep back higher.

(Content adapted from Bring the Blog, a daily blog-writing service for mortgage and real estate salespersons)

The Federal Open Market Committee starts a 2-day meeting today and will vote to keep the Fed Funds Rate unchanged. Don't expect mortgage rates to stay unchanged, too, however.  The Fed Funds Rate and the 30-year fixed mortgage rate are two completely different animals.

Yet, people confuse them all the time. Here's what you need to know.

Conforming Mortgage Rates Are Made On Wall Street

The Federal Reserve controls two interest rates -- the Fed Funds Rate and the Discount Rate.  Both are "banking" rates.  Neither is a consumer rate.

When the Federal Reserve makes a vote on the Fed Funds Rate, it's voting on the rate at which banks borrow from each other. The Federal Reserve is not voting to change consumer mortgage rates because, based on its government charter, it can't.

Therefore, if you're looking for somebody to tell you where mortgage rates will go, don't look to the Fed.  Look to Wall Street instead. Mortgage rates are the by-product of mortgage-backed bonds and their respective prices. The Federal Reserve has nothing to do with it.

If the Fed controlled mortgage rates using the Fed Funds Rate, the interest rate spread between the two would be liner.

Clearly, it's not.

Ben Bernanke Influences The Mortgage Market

Now, all of that said, the Fed is not without influence on mortgage rates.  This is because the Federal Reserve is our nation's Central Banker and its policies set the tone for the equities markets.

For example, when the Federal Reserve makes positive comments about the economy, the stock market tends to gain and those gains come at the expense of bonds.  Similarly, when the Fed is down on the economy, stock markets often sell off and bond markets get the benefit.

Simplified:

• Rates rise when the Fed is unexpectedly positive on the economy
• Rates fall when the Fed is unexpectedly negative on the economy

This is why it doesn't matter how the Fed votes tomorrow.  It'll be the group's post-meeting press release that sets the tone for mortgage rates.

It's imprudent to float a mortgage rate ahead of a FOMC meeting.

Call In Your Rate Lock ASAP

If you're shopping for a mortgage or otherwise not locked in, talk to your loan officer in advance of the Fed's 2:15 P.M. ET announcement tomorrow. Rates are more likely to rise than to fall.

Or, if you don't have a loan officer, with your details. I'm happy to get your rate locked right away -- before rates change for the worse.

Today, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged within in its current target range of 0.000-0.250 percent.

Jobs Are Beginning To Improve

In its press release, the FOMC noted that, since March, the U.S. economy "has continued to strengthen" and that the jobs markets "is beginning to improve".

This is a step up from the last meeting after which the Fed said jobs were "stabilizing".

Today's statement marks the 7th straight press release in which the Fed shows optimism for the U.S. economy.

Furthermore, the Fed has now closed all but one of the programs it created to support markets during last year's financial crisis.  This includes the Fed's MBS Purchase Program.

Economic Threats And Questions Remain

Threats remain to growth, however. The Fed fingered a few:

1. Employers are reluctant to hire new workers
2. High unemployment threatens consumer spending
3. Consumer credit (still) remains tight

Also in its statement, the Fed re-acknowledged its plan to hold the Fed Funds Rate near zero percent "for an extended period".  This was expected.

Overall, the statement's tone was positive and the Fed noted that inflation is within tolerance.

Mortgage Rate Movement Is Neutral Post-Fed

Mortgage market reaction has been muted thus far. Conforming and FHA mortgage rates in Cincinnati are unchanged post-FOMC.  Jumbo and super-jumbo loans are the same as well.

The FOMC’s next scheduled meeting is a 2-day affair, June 22-23, 2010.

The 55-day span between meetings will be the FOMC's longest of 2010.  A lot can happen in 55 days so if the economy takes off in one direction or the other, don't be surprised to see the Fed call an emergency meeting. It called 3 such meetings last year.

(Post licensed from Bring the Blog, a blog-writing service for loan officers and real estate professionals)

The Federal Open Market Committee starts a 2-day meeting today, one of 8 scheduled meetings for the year.  Bernanke & Co. are expected to leave the Fed Fund Rates unchanged after the meeting, but that doesn't mean mortgage rates will be unchanged, too.

Au contraire, mortgage rates will be all over the place.

Mortgage Rates Aren't Made On Capitol Hill

The Federal Reserve doesn't control mortgage rates.  Wall Street does. Mortgage rates are based on the price of mortgage-backed bonds plus whatever tiered-pricing may apply. When people in Cincinnati apply for a mortgage, it's Wall Street that sets the price.

The Federal Reserves does, however, set the Fed Funds Rate.  The Fed Funds Rate is the interest rate banks charge each other for overnight cash loans. The Fed Funds Rate is used for a very different type of loan as compared to mortgage rates.

The Fed Funds Rate is a Bank-To-Bank rate. A mortgage rate is a Wall-Street-To-Consumer rate.

In other words, the Fed can't change mortgage rates because its powers don't extend that far.

Checking The Difference Between Mortgage Rates And The FFR

Over the last 20 years, it's obvious how different the Fed Funds Rate is from consumer mortgage rates.

The spread has been as large as 5 percentage points, and as narrow as 1.

• 5.000 percent spread or more : 1992, 2002, 2004, 2009
• 1.000 percent spread or less : 1999, 2000, 2006

Furthermore, going back to 1973-1974, and 1980-1981, the spread went negative.  30-year fixed mortgage rates were higher than the Fed Funds Rate.

If the Fed Funds Rate was directly related to mortgage rates, the spreads would be linear.

However, The Fed Can Influence Mortgage Rates

The Fed can't set mortgage rates with its actions, but it can influence mortgage rates with its words.  And that's exactly what will happen tomorrow.

The Federal Reserve is the nation's central banker and when it talks about an expanding economy and inflationary pressures, it causes bond markets to sell off which, in turn, causes mortgage rates to rise.  Similarly, "down" statements on the economy tend to draw rates down.

The Fed will issue a statement at 2:15 PM ET Wednesday and when it does, mortgage rates will react.  Not because the Fed Funds Rate is different, but because the Fed's press release will highlight the economic strengths, weaknesses and threats to the U.S. economy -- the exact things that make bond markets move.

Today is not a good day to float your mortgage.

A Rate Lock Strategy For The Federal Reserve

If you're not locked in, talk to your loan officer ASAP. There's very little room for rates to fall, and plenty of room for rates to rise. It's a gamble on which you don't want to be on the wrong side.

Or, if you don't have a loan officer, with your details. I'm happy to prequalify you when you're ready.

Today, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged, in its target range of 0.000-0.250 percent.

In its press release, the FOMC noted that the U.S. economy "has continued to strengthen" and that the jobs markets "is stabilizing".  It also said that business spending has "has risen significantly".

This is a slight departure from the Fed's January statement in which housing was not mentioned at all, and business spending was said to be "picking up".

The change is notable, even if barely detectable.

Today's statement also marks the 6th straight session after which the Fed described the economy with optimism.  The 2008-2009 recession is over and that growth is returning to Ohio and the U.S., in general.

The economy is not without threats, however, and the Fed identified several:

1. High unemployment threatens consumer spending
2. Housing starts are at a "depressed level"
3. Consumer credit remains tight

The message’s overall tone, however, remained positive and inflation remains within tolerance limits.

Lastly, the Fed confirmed its plan to end its $1.25 trillion mortgage markets commitment in March 31, 2010. Fed insiders estimate that the bond-buying program lowered mortgage rates by 1 percent since its start. Rates should rise once the program expires.

Mortgage market reaction is muted to the Fed's press release. Mortgage rates are unchanged this afternoon.

The FOMC’s next scheduled meeting is a 2-day affair, April 27-28, 2010.

(Content supplied by Bring the Blog)

The Federal Reserve begins a scheduled 2-day meeting today during which it which it will vote to leave the Fed Funds Rate unchanged near zero percent.  The press will report this tomorrow as "Fed Holds Rates Steady".

But, don't confuse this to mean that the Fed held mortgage rates near zero. The Fed doesn't set mortgage rates.  The Fed sets the Fed Funds Rate. The former is a long-term rate and the latter is a short-term rate.

The Fed Funds Rate and the 30-year fixed mortgage are two different animals.

The Fed Funds Rate is set by the Federal Reserve to accelerate or retard economic growth.  Mortgage rates are set by price of mortgage-backed securities at any given moment plus any applicable loan-level pricing adjustments. If the two were directly related, the chart above would be linear.

Instead, it's got more steps than the cover of Houses of the Holy.

Since 1990, the spread between the Fed Funds Rate and the 30-year fixed rate mortgage has been as narrow as 1 percent and as wide as 5 percent.  Going back even further, to 1973-74 and then again to 1980-81, there's been instances of the interest rate spread going negative; mortgage rates were below the Fed Funds Rate.

Hopefully it's clear now. Mortgage rates and the Fed Funds Rate move independently. The Fed doesn't set mortgage rates.

However, it does influence them.

As the nation's central banker, the Federal Reserve sets policies that change the U.S. economy's direction and changes in the economic happen to make a huge impact on mortgage rates.  It's one reason why mortgage rates were so volatile in 2009 -- the future of the economy was a giant glob of murk and as Wall Street did its bidding, rate shoppers got tossed along for the ride.

So, let's ignore what the Fed will or won't do tomorrow and focus instead on what the Fed says.

See, when the Fed adjourns, it issues a statement in which Bernanke & Co address the nation's economic strengths, weaknesses and threats. If the Fed's statement shows optimism for the economy in its statement, mortgage rates will rise as money flows away from the safety of the mortgage-bond market.

If the Fed's statement show pessimism, on the other hand, mortgage rates will fall.

Either way, be on alert.  The Fed statement hits at 2:15 PM ET Wednesday.

For Cincinnati home buyers and homeowners shopping for low mortgage rates, you must understand the difference between the Fed Funds Rate and a long-term mortgage rate. When you do, you're more likely to lock a mortgage rate on time as opposed to locking a mortgage rate too late.

If you've never been on the wrong side of that gamble, just ask a friend -- it stinks.

So, to get help with your rate lock, including timing it for the lowest possible rates in your local market, with your details and I'll do my best to help get you started. I answer all my own emails and my mortgage rates are very good.

This is a short list of things that don't control mortgage rates:

1. 10-Year Treasury Note

Over long periods, the 10-year treasury trends with mortgage-backed securities. On any given day, however, the two can move in opposite directions. You can't watch the 10-year ticker on TV and think you know where mortgage rates are going.

2. The Fed Funds Rate

The Fed Funds Rate is the rate at which banks borrow from each other overnight. A mortgage rate, by contrast, is the rate at which a homeowner borrows from a lender. If the Fed Funds Rate and mortgage rates were connected, this chart wouldn't be so jagged.

3. Ben Bernanke

Ben Bernanke is the Chairman of the Federal Reserve, the group that sets the Fed Funds Rate. His influence on mortgage rates, therefore, is muted. However, Bernanke's Fed has been a buyer of mortgage bonds in 2009 so its influence on rates is somewhat elevated. The buying schedule ends in March 2010.

4. Congress

Congress can sway mortgage markets with policies and rhetoric, but as the legislative branch of the U.S. government, its influence on mortgage rates remains indirect. No matter what it says or does to influence the economy, it's still the traders in the mortgage markets that have to take the bait.

5. Chuck Norris

Although Chuck Norris can beat a brick wall in a game of tennis, his legend is no match for mortgage rates. When markets decide they want to rise, they rise.

There's only one thing that controls mortgage rates -- the price of mortgage-backed bonds. Unfortunately, there's no publicly-available tool to watch how mortgage-backed bonds are changing on an hour-to-hour basis.

As a loan officer, I pay for a premium data feed to track mortgage-backed bonds in real-time. I post semi-regular updates to my Facebook Fan page and to Twitter.

For some people, though, that's not personal enough and I understand.

If I can ever help with your individual rate lock decision or to act as a sounding board for your mortgage ideas, . I answer my emails personally and am happy to help you with strategy.

If the Fed Funds Rate correlated to 30-year fixed mortgage rates, this chart would be linear. It's not.

This point takes on added significance 8 times annually when the Federal Open Market Committee meets.  The FOMC is the policy-setting ARM of the Federal Reserve.  It raises or lowers the Fed Funds Rate to slow down or speed up the economy, respectively.

The Fed's actions are so important to markets and investors that news organizations like the Wall Street Journal dedicate entire sections to things like "Fed Watching". Comprehensive coverage doesn't make the Fed Funds Rate any less misunderstood, however.

Even the brightest of the bright mistake the role of the FOMC in mortgage markets.

The Federal Reserve does not set mortgage rates. Mortgage rates are based on the raw price of mortgage-backed securities plus applicable loan-level pricing adjustments.  Or, with respect to jumbo mortgages, rates get set by individual banks.

The Fed does, however, influence rates.

Combining rhetoric with more than a trillion dollars, the Fed has helped keep fixed-rate conventional mortgages below 5.500% for the better part of the year.  And now markets are curious: Is the Fed done with its interventions?

The FOMC starts a 2-day meeting today and there's a 1 in a million chance the Fed will raise the Fed Funds Rate from its current range near 0.000 percent.  But that doesn't mean that mortgage rates won't change.  All that has to happen is for the Fed to change it rhetoric.

After its last meeting, the FOMC said the economy is "leveling off". Since then, the housing market has shown tremendous strength and Chairman Ben Bernanke has said the recession "is very likely over".  Therefore, it wouldn't be out of the question for the Fed to get more rosy in its economic outlook and that would cause mortgage rates to rise.

In fact, markets are almost prepping for it.

Today, rates are rising in advance of the FOMC's 2:15 PM ET press release Wednesday.  If you're the nervous type, consider locking in your mortgage rate.  There's a much bigger chance that rates will rise this week than rates will fall.

As a loan officer, I have a direct feed to the mortgage-backed securities market and watch it all day long.  I can help you time the market bottoms to get the best rates possible.  with your loan details and I can watch your rates for you.

Or, fan me up on Facebook -- I post semi-regular market updates to my profile.

Markets move quickly and unless you're watching the data in real-time, you're probably going to pay a higher rate than you have to.  Locking near-bottom requires precision.

Mortgage rates are notoriously volatile when the Federal Open Market Committee meets and today is such a day.  Today's meeting is one of  this year.

The Federal Open Market Committee is a rotating, 12-member sub-group within the Federal Reserve that debates about financial and economic conditions around the county, and votes on new policies meant to spur, steady, or slow economic growth.

The FOMC's economic toolbox is big, filled with programs and policies that most laypersons have never heard of, or even thought of.  The group's most well-known tool, though, also happens to be its most wielded -- the Federal Funds Rate.

The Fed Funds Rate is the rate at which banks borrow from each other overnight.  The lower the rate, the less banks pay in interest costs, and the more money is available for lending. 

It's in this way that the Fed Funds Rate impacts the economy.  When it's down, banks tend to lend more money, giving the economy room to grow.  And, conversely, when it's up, banks tend to lend less, constricting economic expansion.  This is one reason why FOMC meetings are such big news -- the Federal Reserve has a direct impact on the future of the U.S. economy.

The FOMC is expected with 100% certainty to vote the Fed Funds Rate unchanged from its current 0.000-0.250% target range at today's meeting.  Therefore, it won't be what the FOMC does that matters to mortgage rates. It will be what the FOMC says.

With the economy flopping between growth and recession, and with the Fed pledging to keep the Fed Funds Rate low for as long as necessary, markets will break down the FOMC press release for clues about what's in store economically for late-2009 and 2010.  As one example, if inflation is singled out as a threat, mortgage rates should rise because inflation erodes the value of mortgage bond repayments.

Given the current environment of low mortgage rates -- whether you live in Hyde Park, Cincinnati or Hyde Park, Chicago -- there's definitely more chance of mortgage rates rising this afternoon than falling.  There's only so much lower rates can go, you have to believe.

The Fed's press release hits the wires at 2:15 PM ET today.  If you're the cautious type, consider locking your rate prior to the release.