Mortgage rates began the day lower, with several lenders releasing their best rate sheets in nearly 5 months. The day progressed well in the secondary mortgage market with MBS prices (the “mortgage backed securities” that most directly affect rates) rising steadily into the Federal Reserve’s policy announcement. When MBS prices move higher, rates move lower.
The Fed wasn’t seen as likely to change monetary policy in any way at this meeting, but market participants may have justifiably been expecting a more cautious tone than they got. The Fed even removed verbiage alluding to the risks associated with recently tight financial conditions. Bond markets, including MBS, weakened quickly following the announcement, and many lenders revised rate sheets to fall more in line with yesterday’s.