When the Fed acts, it affects your wallet. For that matter, if the Fed stands pat, that makes a difference to your finances, too. Here’s how the Fed’s latest announcement will affect mortgage rates

Fixed-rate mortgages: Rates have remained within a tight range this year. In Bankrate.com’s weekly index of mortgage rates offered by large lenders, the average 30-year rate has fluctuated between 6.82 percent and 7.18 percent. That low point of 6.82 percent was reached Feb. 27 and May 1, and it’s hard to see it going much lower than that.

Long-term mortgage rates do not follow changes in the federal funds rate. Instead, they move roughly with long-term bond yields. The bond yields, in turn, respond to broad economic factors, such as inflation and unemployment rates.

Bond traders are ready to pounce on any definitive signs of economic recovery. So far they have seen only mixed signals. As they see positive signs, such as increased factory production and a subsiding in the unemployment rate, long-term rates will begin to rise.

Best move now: Any time you can get a 30-year loan for 7 percent or less, you should consider locking in. Anything less than 7.25 percent is good by
recent historical standards. So watch the roller coaster, and lock in on the dips.

Here’s another bit of advice: Know what you can afford in a home and a loan, and don’t take a deal that won’t work for your budget. When you’re ready to buy, try the Bankrate.com
mortgage rate search to locate the best deal.

The 30-year fixed-rate mortgage averaged 6.82 percent on May 1 in the Bankrate.com national weekly survey. The 15-year fixed-rate mortgage averaged 6.29 percent.

Adjustable-rate mortgages: ARM rates started responding to the Fed’s aggressive rate cuts last year. That’s because they tend to follow changes in short-term rates, such as the yields on short-term Treasury bills and notes, which track the federal funds rate closely. ARM rates should stay low until at least the end of June and maybe into August. Eventually the Fed will raise short-term rates and ARMs will follow.

Best move now: Someone who plans to live in a house for only a couple of years might want to consider a short-term ARM now that rates on such loans have fallen. The same holds true for someone who needs a little extra help getting into a home. But fixed rates are low by historical standards. Borrowers with a longer-term horizon should probably lock in a low rate for 30 years rather than get an ARM with a rate that can head in only one direction — up.

One-year ARMs averaged 5.27 percent on May 1 in the Bankrate.com national weekly survey. Search for
the best ARM rates in your area.