PMC Mortgage Lender's Blog

“The Federal Reserve said on Tuesday this week that it was closing the books on 2011,” reports Binyamin Applebaum, New York Times financial reporter.

The Federal Open Market Committee met and voted for the 16th consecutive time to leave the Fed Funds Rate unchanged.

Wall Street wanted QE3. It failed to arrive. So, mortgage rates are dropping.

The vote was nearly unanimous with just one dissent: a vote in favor of additional policy stimulus beyond what the Federal Reserve currently provides.

The Federal Reserve said that the U.S. economy is improving. It noted that since its November 2011 meeting, the economy has been "expanding moderately" despite some "apparent slowing in global growth," alluding to the Eurozone's financial issues. Read the Fed's Statement.

No Change in Fed Policy; No New Stimulus.

The Fed's economic analysis appears mixed. It acknowledged moderate growth expectations over the next year, but there are challenges.

As such, the Bernanke-led Fed added no new policies at its December meeting, and made no changes to existing ones.

It did reiterate its plan to leave the Fed Funds Rate within its current range of 0.000-0.250 percent "at least until mid-2013" and also re-affirmed "Operation Twist". There was no mention of a "QE3" program or other market stimulus. The Fed left everything as-is until its next meeting on January 24-25, 2012.

Play the Fed's Decision for Low Mortgage Rates

Wall Street expected the Fed to "do more." Because the Fed stood pat, though, a window to lock low mortgage rates just opened up. It did not exist before the Fed’s press release on Tuesday.

Market conditions look great. There's steady growth, low inflation, and no clear resolution within the Eurozone.

These three forces have combined to push mortgage rates down to levels we never imagined possible just six months ago, let alone six years ago.

This isn’t the time to sit on the fence. For a borrower wanting to buy a home, or an owner ready to refinance there is a short window of opportunity to take advantage of historic low interest rates.