Fed meets; lock your rate

Sept. 23, 2009
Written 10:30 a.m. EDT

FED DAY: The Federal Reserve wraps up a two-day meeting today, and will release its rate policy statement at 2:15 eastern time. They won't raise short-term rates. But they might say something that causes interest rates to move up or down. And that means that it's risky to float into this afternoon if you plan to close on a mortgage this week or next. Why is it risky? Because if rates rise today, you don't have a lot of time for them to fall.

You can't predict what the Fed will say, and even if you could, you wouldn't be able to predict accurately how the markets would react. For example, let's think about what would happen if the Fed were to say today that it will extend its mortgage purchases into the middle of next year. Would mortgage rates stay low, or would investors worry about inflation and let rates rise? Either would be a possibility.