by Calculated Risk on 9/17/2015 08:06:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Drop Sharply After Fed Announcement

While the Fed Funds Rate doesn't directly dictate mortgage rates, the two tend to correlate over time. At its most basic level, the Fed rate dictates the cost of short term money, which has ripple effects that carry through to longer term financing costs, like those associated with things like 10yr Treasury notes and mortgage rates.

Not only did the Fed forego a rate hike, they were also noticeably more downbeat about inflation and global growth/stability. It's just as likely that these longer-term implications helped longer term rates (like mortgages) do as well as they did today.

All that having been said, the drop in rates merely brings them back in line with last week's best levels. Considering they only rose from there due to Anxiety over today's Fed meeting, it's not unfair to say that rates are still in the same narrow range that's been in effect for more than 2 months. ... several lenders inching back into the high 3's today for conventional 30yr fixed rate quotes ...

Friday:
• At 10:00 AM ET, Regional and State Employment and Unemployment for August.

• At 12:00 PM, Q2 Flow of Funds Accounts of the United States from the Federal Reserve