Fed fund rate unchanged, but....

This does not mean that mortgage rates are going to remain below 5% for an extended period of time. In our McCulture, we have a tendency to read only the headlines. It is important that you read deeper into the entire Fed statement to form an opinion as to where rates will go from here.

First you must understand that the Fed fund rate and mortgages rates are not the same thing. The reason that 30 yr fixed rates have hovered at or below 5% for the better part of a year is due to the Fed's mortgage backed securities purchase program. This program is set to conclude on March 31st. At that time, the Fed expects a modest rise in interest rates. What that means exactly, remains to be seen. History tells me that since we are working in a 4.875%-5.125% range on fixed rates, we can expect to be in a 5.25%-5.5% range very shortly. Rates should then rise at a measured pace. What this means if you are.....

Purchasing a home?

If you are purchasing your home, this is not that big of a deal. You should move quickly, but slightly higher rates may actually give you additional bargaining power. If you are buying your first home, you should definitely be moving quickly to take advantage of the first time homebuyer tax credit.

Waiting to refinance?

If you are one of the many who are waiting for a 4.5% 30 yr fixed rate, you should act now. It is very likely that the 4.5% ship left the port and is not coming back.

Upside down and do not think you can refinance?

There is another group of homeowners that does not even think that it is possible for them to refinance due to having little or no equity. This is not necessarily the case; as part of the HARP program it is possible for "upside down" homeowners to refinance at a lower interest rate without mortgage insurance. You should contact a trusted lender today.

The bottom line:

Rates will go up, as you have been hearing for months. With the Fed pulling out of the MBS market and the traditionally strong spring housing market upon us, the probability of mortgage rate increases seems to be more likely than ever.