This Week’s Mortgage Rate Predictions

This week marks the first Federal Open Market Committee meeting of 2010. These are notoriously influential on mortgage rates and the stock market. On Wednesday, the two-day meeting will wrap up. The expectation is that the Fed Funds Rate will remain at its current levels. It is the press release issued after the meeting that will move interest rates this week.

When looking at mortgage rate predictions, you need to take them all with a grain of salt. It’s nearly impossible to identify exactly what mortgage rates will do, but it’s critical to know what will be driving them. This week, it is 100% about the Policy Statement or press release. If the Fed indicates that the economy is rebounding and recovery as they expected, look for interest rates to jump higher. Conversely, if there are lingering concerns or risks, that will possible push rates lower.

The market has already shrugged off a very soft Existing Home Sales report. In a typical week, that would have moved the market. In a Fed Open Market Committee week, it’s usually quiet before the storm.

The only certainty for this week’s mortgage rate predictions is that it will be volatile. We’ll update the current mortgage rates on Wednesday afternoon after the news breaks. This should be a very interesting meeting as the Fed gives us the first opportunity in 2010 to see what they are thinking.