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.

Mortgage markets improved yesterday after the Federal Reserve released its March 16, 2010 meeting minutes. It's good news for Cincinnati home buyers and rate shoppers -- rates could have just as easily gone the other way.

The Meaning Of The Fed Minutes

The Fed Minutes is a detailed recap of the debate and discussion that shapes the nation's monetary policy. The notes are dense; it takes 3 weeks to compile them for publication.

As compared to its more well-known, post-meeting press release cousin, the Fed Minutes are extremely lengthy. In word counts:

• March 16 press release : 451 words
• March 16 meeting minutes : 6,152 words

If the press release is the executive summary, in other words, the Fed Minutes are the novel.

A Not-So-Hidden Message On Inflation

The extra words matter.The minutes recount what the Fed did, how the Fed did it, and what the Fed plans to do next. And, in the minutes, Wall Street looks for clues.

This is why the report is important to every rate shopper in the country.

When the Federal Reserve publishes the minutes from its meetings, it leave clues about the groups next policy-making steps.  For example, in March's Fed Minutes, it's clear that the Fed's concern about inflation is hugely diminished and that's a major plus for the mortgage bond market.

Inflation causes mortgage rates to rise. The absence of inflation, therefore, helps them to fall.  This improves home affordability, among other things.

The Fed Explains Why Home Sales Are Strong

Similarly, the Fed Minutes note that real estate sales may have been worse throughout the winter months if not for low mortgage rates and the sense among Americans that home prices were troughing. We may infer, therefore, that rising rates may suppress home sales later this year.

Markets are always looking for clues from inside the Fed and the last meeting's minute signal that the economy is on its way up.  If you're looking for a bargain in the housing market, your window to act may be closing.

Going under contract for home this week or this month? to send me an email and get a competitive rate quote.

(Post licensed and reprinted with permission from Bring the Blog)

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)

Need a mortgage rate prediction? I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey may help you.

By way of disclosure, the Bankrate.com survey is for conventional, conforming mortgages only. It does not apply to FHA mortgages or jumbo mortgages. Nor is the survey specific to Cincinnati or Chicago mortgage rates.  Furthermore, unique property types including non-warrantable condos and condotels may be excluded.

for a real-time rate quote.

Here's the group's mortgage rates predictions:

• 27% predict mortgage rates will increase
• 0% predict mortgage rates will decrease
• 73% predict mortgage rates will remain unchanged

I expect mortgage rates to remain unchanged.

My advice not be appropriate for your individual situation and I'm not always right. Ultimately, you may find your time better spent watching The Greatest Network Television Weather Forecast of All-Time than reading my analysis.

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

"Markets are in a Tug-O-War -- it's Geopolitics versus The Fed."

There's lot of reasons why mortgage rates change -- revised expectations for the economy, new Fed monetary policy, and psychological factors on Wall Street are among them.

In total, there are hundreds of influences on the day-to-day mortgage rates you and I see from the banks.  It's part of why predicting mortgage rates so challenging.  We can never know which of the hundreds are influences are about to come into play.

We can break influences down into two parts -- obvious, and non-obvious.

Obvious influences are inflation data, housing stats, and job markets.  These we can prepare for; can be proactive about. And, indeed, Wall Street does.  The preparation is why mortgage rates tend trend higher or lower heading into a "major" news release.  The movement is the market squaring its bets.

It's the non-obvious factors, though, that really screw things up.

• An "emergency" change to monetary or fiscal policy, at home or abroad
• A sudden change in the political climate, at home or abroad
• An outbreak of -- or an end to -- war, terror, disease or the like, at home or abroad

In other words, anything that "shocks" the global financial system.

There was a terrific example of such a shock two weeks ago. One day, everyone woke up and suddenly thought Greece couldn't meet it country's debt obligation. The thought drove fear through the Eurozone, then through the broader market, and eventually, it led to safe-haven buying that propped up U.S. mortgage markets.

There's other recent examples, too. Like when the Fed initially announced its support for the mortgage-backed bond market in November 2008; or, when inflation numbers ran much hotter-than-expecter near the end of May 2009.

It happened yesterday, too.

The Fed released the minutes from its January 2010 meeting Wednesday afternoon and there was an underlying message that "change is coming".  Markets didn't expect to hear that just yet and it sent mortgage markets reeling.  Rates spiked by an eighth-percent within minutes of The Minutes' release.

As a rate shopper, unexpected news is frightening. It makes markets do things you wouldn't expect.  And that's why we're calling for a draw over the next week. The likelihood of Eurozone debt concerns leading mortgage rates lower will be offset by the tendency of rates to rise when the Fed starts talking strength.

That said, if you need a rate locked in the next week or so, consider doing it sooner rather than later.  The Fed's exit from the mortgage market is going to push rates up and that exit's in less than 5 weeks.  It's time to get a move on.

Locking mortgages is a timing game and you'll want some help to get it right. Call your loan officer or, if it's easier for you, with your situation. I handle all of my own email and I am happy to get you a good rate lock. It's what I do best.

Plus, my bank has good, low mortgage rates. Just ask me about it.

Recapping the FOMC statement from January 27, 2010 and what it means for mortgage rates.

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.

Need a mortgage rate prediction? I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey may point you in the right direction.

The Bankrate.com survey is for conventional, conforming mortgages only. It does not apply to FHA mortgages, veterans mortgages, or jumbo mortgages. Nor is the survey specific to Cincinnati.

for a real-time rate quote.

Here's the group's 30-day prediction for mortgage rates:

• 33% predict mortgage rates will increase
• 27% predict mortgage rates will decrease
• 40% predict mortgage rates will remain unchanged

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 watching this video about Poland Spring Water than reading my analysis.

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

"The Fed just bought the mortgage markets another 30 days of low rates."

With consumer confidence on the mend, net job gains nearing zero, and Retail Sales rebounding, Wall Street had bid up mortgage rates this month. Since touching an all-time low (for the 5th time this year) at Thanksgiving, rates had surged by nearly 3/8 percent.

Mostly, the trading was just jockeying for position ahead of the December 15-16 FOMC meeting.

Investors were worried that the Fed would blink; that it would change its economic outlook for 2010 and have to start raising the Fed Funds Rate sooner than forecast; that inflation fears would return.

Instead, none of that happened.

In the FOMC's post-meeting press release, the Fed talked about the economy "picking up" plus stronger jobs and housing markets, but it also said that risks to growth remain. Notably, consumer credit is tight and businesses are reluctant to hire new workers.

And then, to back that up, the Fed made 5 separate comments stating inflation is under control.

Markets didn't know what to make of the Fed's statement. There was a lack of conviction in both directions and that will help rate shoppers in the weeks ahead.  The last thing traders want to do is take on more risk before the New Year and the Fed just gave investors the green light to park cash in bonds.

This includes the mortgage-backed variety, of course.

That said, rate should remain bumpy for the foreseeable future so if you need to lock a rate, talk with your loan officer in advance about selecting the rate that's right for you. Then, set a plan to wait for it.

If you're patient and your rate target is reasonable, you'll probably get the chance to lock.

If you don't have a loan officer for refinancing, just with some notes on your mortgage. I'll bounce back with some answers for you. I handle my emails personally.

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.

The Federal Open Market Committee starts a 2-day meeting today, one of 8 scheduled meetings this year.

The FOMC is the policy-making arm of the Federal Reserve.  It's  most commonly known for its role in setting the Fed Funds Rate.  When the economy needs a jump-start, the FOMC often lowers the Fed Funds Rate to make borrowing less expensive for both businesses and consumers.

Conversely, when the economy is going gang-busters, the FOMC tends to raise the Fed Funds Rate to slow things down.

Currently, the Fed Funds Rate is in a "target range" of 0.000-0.250 percent -- the lowest it's been history.  It's a stimulative position for the economy and markets don't expect the rate to change. Based on trading in Fed Funds Futures, Wall Street predicts with 100% certainty that the Federal Open Market Committee will vote to leave the Fed Funds Rate unchanged.

However, just because the Fed Funds Rate will be staying as-is doesn't mean that mortgage rates will, too.

Mortgage rates are not controlled by the Federal Reserve.  They are "made" in the mortgage-backed securities market and MBS is highly responsive to changes in the U.S. economic outlook.

It's in this fashion that the Federal Reserve can influence mortgage rates.

The FOMC's post-meeting press releases address the economy, its strengths and its weaknesses.  It's also not uncommon for the Fed to offer a brief outlook for the next few quarters.  As home buyers and would-be rate shoppers, you can't underestimate the power of these worms words.

The Fed's press release will likely address the recent relative strength of housing, employment, and sales data.  If the Fed concludes that recent data foreshadows the end of a recession, look for stock markets to take off and bond markets to sink.  Furthermore, expect a return of the inflationary talk that tends to kick mortgage rates in the gut.

Inflation is the enemy of mortgage rates.

On the other hand, if the Fed's press release says that economy should remain weak through 2009 and into the start of 2010, well, that's kind of what Wall Street is expecting.  Mortgage rates would likely dip some, in this instance, but not by much.

In other words, mortgage rates may fall when the Federal Open Market Committee adjourns tomorrow, but the amount by which they could fall is much less than the amount by which they could rise.  The safe bet, therefore, may be to lock your mortgage rate in advance of the FOMC's 2:15 PM ET adjournment.

If you're not already working with a loan officer and want to get your mortgage rate locked quickly, call or and we'll take your mortgage application for you right away.  With the good chance that rates could rise again Wednesday, you might not want to gamble on waiting for a lower rate.

The Federal Open Market committee (FOMC) is the monetary policymaking body of the Federal Reserve System.

This is the group of which Ben Bernanke is Chairman.

Most people can identify Ben Bernanke by face or name, but few understand the role of the FOMC Chairman or his committee with respect to markets and mortgage interest rates.

The Federal Reserve is the central bank of the United States. It was originally created to prevent financial crises by controlling how quickly money flows through banks and businesses. The biggest weapon in the Fed's arsenal to control to the flow of money is the ability to manipulate short-term interest rates.

The FOMC assesses the benefits and risks of adjusting short-term rates during their periodic meetings. The FOMC meets eight times annually.

The Fed has control over two different short-term interest rates.

1. Discount Rate -- The interest rate at which the Fed charges banks to borrow money overnight
2. Fed Funds Rate -- The interest rate at which banks borrow from other banks

Note that the Fed does not control long-term interest rates such as the 10-year treasury note or mortgage rates.

When the Fed changes rates, the effects are felt in other financial markets including foreign exchange and credit which impacts all aspects of the economy.