The Federal Reserve left their benchmark rate, the Fed Funds Rate, at 2% today. We've been talking about this in the Daily Updates and this was consistent with expectations.

Immediately following, bonds dropped significantly but have since stabilized and are nearly even on the day.

The only thing that the Fed could have done to further help mortgage rates today would have been to RAISE rates today.

An increase in rates today would have actually lowered mortgage rates, saved you a few bucks at the gas pump, helped with food prices, and made an overseas trip more affordable.

Let's look at what happened:

• Sept. 2007: Fed Funds, 5.25%. Oil, $73/barrel. One Euro=$1.35.
• Rate Cuts: With recession looming, the Fed undertandably cuts rates, repeatedly, until pausing just a few months ago.
• Dollar Weakens: Lower rates in America makes investing in Europe more attractive.
• Oil Jumps: oil is priced in US Dollars, as the Dollar declines, the price of oil must rise.
• June 2008: Fed Funds, 2%. Oil, $137/barrel. One Euro=$1.56

Are you using twice as much oil? Doubtful. Many people are using less. There are other factors, but this volatility is compounding.

We're seeing a change in trends at the Fed and it could be for the better. Rate hikes do slow growth; however, a pending rate increase could help slow rising food and energy costs. As a nice side benefit, it would create a short-term refinance bubble in the very near future.

With all lenders, including Conforming and FHA, adding credit score penalties to mortgage rates we are recommending that you confirm the accuracy of your credit file.

If you're just looking to confirm accuracy, we'd recommend a link in the Credit Center for your free annual report. If you'd like to confirm your score, contact us for a free credit report including your scores.