THE TECHNICAL STUFF:
Yesterday the Fed decided to take a pause in raising short-term interest rates leaving the Fed Funds Rate at 5.25%. What does this mean? The Fed thinks inflation is probably back in check.

What is interesting is that the vote to pause wasn't unanimous. Richmond Fed President Jeffrey M. Lacker had voted for another 25bp rate hike. Because the hike wasn't unanimous, the mortgage market is jittery because we don't know if the Fed is taking a temporary break from raising rates or if rates will rise again in the fourth quarter.

Here's the relevant language in the Fed's latest statement: “…[I]nflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.” This meands that the Fed will closely monitor economic reports for the next few months, and this will determine whether we see another rate hike in the near term.

WHAT DOES THIS MEAN FOR MORTGAGES?
We have been seeing a move towards lower mortgage rates, and I believe this will continue. In spite of today's news about a foiled terrorist plot, the bond market is pretty stable today. While a turn for the worse is certainly possible, I am optimistic for better rates in the next few weeks.

As always, feel free to call me with any questions about mortgages!

Peter