Why Mortgage Rates Should Move Higher Today -- No Matter What The Fed Does

I am not in the game of making predictions about mortgage rates because I don't gamble with other people's money.  This is the major reason why I recommend locking at today's mortgage rates rather than waiting for tomorrow's.  Who knows what tomorrow will bring?

After all, think back 25 years:  Investors were passing on 17% yielding bonds because they wanted to wait for 18%.  In hindsight, it's a foolish risk.

But, everybody likes to ask me what I think anyway.  So, here you go:  This Armchair Quarterback says that no matter what the Fed does today, it's going to be bad for mortgage rates.

If the Fed lowers the FFR, looser credit should boost the stock market, causing dollars to flow into stocks at the expense of bonds.  The decreased demand for mortgage bonds pushes mortgage rates higher.

If the Fed holds the FFR, it's a signal that the Fed is more concerned about inflation than the effects of the credit markets and that should cause the dollar to weaken dramatically.  This will cause mortgage bonds to devalue and that would push mortgage rates higher.

If the Fed raises the FFR, well, as four exterminators would put it: think fire and brimstone coming down from the skies, rivers and seas boiling, forty years of darkness, earthquakes, volcanoes, the dead rising from the grave, human sacrifice, cats and dogs living together -- mass hysteria.  And that would have to be bad for rates, somehow, I would think.

I just don't see a winning scenario for mortgage rate shoppers today.

The FOMC releases its statement at 2:15 P.M. ET.