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The Federal Open Market Committee (FOMC) met for a one day meeting today. Usually they meet for two. At 2:15, the FOMC released their statement on monetary policy. The statement was very similar to the FOMC statement released after the January meeting. They reiterated the need for low rates for an "extended time" and that inflation is not a concern today. There were two changes made that relate to housing. First, the verbiage referring to the MBS Purchase Program, which is scheduled to run out of funding at the end of March, added what may be a door to extend the program in some capacity. Additionally, the Fed inserted a few words that imply they are concerned about the health of housing, stating: "Housing starts have been flat at depressed levels". This adds some hope that the Fed may need to add funds to the MBS Purchase Program if mortgage rates move higher following their withdrawal at the end of March. HOW DID MORTGAGE RATES REACT TO THE FOMC STATEMENT???...

Mortgage rates moved higher today as MBS prices fell following two better than expected economic reports. The move lower in MBS prices forced lenders to reduce rate sheet rebate, pushing consumer borrowing costs higher for the third consecutive day. The streak of rising rates was started by a weak 3 year note auction on Tuesday which carried over into Wednesday and Thursday after the Treasury found it difficult to attract demand for their auctions of 10 year notes and 30 year bonds. Unfortunately the negative momentum extended into today thanks to retail sales and consumer sentiment releases were better than anticipated. ...

It was a busy day in the rates market yesterday. Although several data releases needed to be digested, the main event was the 30 year bond auction. Recently, while demand for shorter maturity Treasury notes has proven stable in the "post-November 4 FOMC statement" environment, the market has forced yields higher in the long end of the yield curve. Specifically the benchmark 10yr note and the 30 year bond have taken a beating over the past two weeks. Yesterday was the first chance we had to really test market's appetite for longer dated debt investments, which have more of an influence over mortgage rates. Unfortunately, while specific buyers supported the bidding, overall demand was weak compared to previous auctions. Following the release of the auction results, MBS prices plummeted and a few lenders with itchy trigger fingers repriced for the worse. However, soonthereafter the rates market recovered all losses and prices went green on the day! By the end of the day, MBS prices were at their highest levels in quite some time. Most lenders repriced for the better as the gains held until close. To remind readers, as the price of MBS move higher, lenders are able to pass along lower mortgage rates. That momentum has carried over into today as MBS prices are once again slightly higher. ...

Despite a rally in stocks, mortgage backed securities managed to post nice gains yesterday after a stronger than expected 30 year bond auction. It is not very common to see stocks and bonds both rally on the same day especially when stocks tested their best levels in over three months. Several lenders did reprice for the better following the auction at 1pm as the gains in MBS price held to the end of the day. To remind readers, as the price of MBS move higher, lenders are able to offer lower mortgage rates. ...