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 can be superfluous.  For example, this is a mortgage blog. When I write "rates are lower", it's implied that I'm talking about mortgage rates.

In some cases, though, omitting adjectives can lead to dangerous misunderstandings.  One of the most common examples in the Mortgage World recurs each time the Federal Open Market Committee adjourns.

The FOMC meets at least eight times annually and, at each meeting, the Fed votes to raise, lower, or leave unchanged the Fed Funds Rate.  The vote has huge implications for the U.S. economy and often makes worldwide news.

Unfortunately,  when reporting on the FOMC's decision, press members often fail to include the leading adjective.  They'll say something like, "The Fed voted to raise rates today" instead of "The Fed voted to raise the Fed Funds target rate today".

It's an important distinction because most Americans never learned about the scope of the Federal Reserve's control; they don't know how the Fed influences banking.

Furthermore, because Americans tend to believe that the Federal Reserve controls mortgage rates, when people hear that "rates were raised", they assume it to mean that mortgage rates were raised, too.

Mortgage rates and the Fed Funds Rate don't move in tandem.  The chart proves it.

Since 2000, 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 -- hardly a direct relationship.  There was even a period in the 1970s and 1980s where the spread was negative; where mortgage rates were lower than the Fed Funds Rate.

One reason why the two rates move semi-independently is that the Fed Funds Rate is an overnight rate and the 30-year fixed rate is a long-term rate.  Borrowing and lending is much less risky over an 8-hour period versus a 263,000-hour period.

Last week, the Federal Open Market Committee voted to hold its benchmark lending target rate between 0.000 percent and 0.250 percent.  Mortgage rates fell on the news.