Important information from one of my trusted mortgage brokers, Jill Carothers at All California Mortgage: jill@thecarothersgroup.com, 415-686-0699.  The Federal Reserve Board (the Fed) is holding the first of its eight scheduled meetings for the year, which takes place at approximate six week intervals.  This first meeting is particularly important, with two issues requiring our close attention. The first is the Fed’s language.  In all policy statements during 2009, the Fed’s statement said that present economic conditions should “warrant exceptionally low levels of the Federal Funds Rate for an extended period.”  If the Fed  does not comment that the Fed Funds Rate will remain low for an “extended period,” this will signal a change in their accommodative policy.  The result will be a sell off of mortgage bonds, causing home loan rates to move up.   The second issue deals with the upcoming expiration of the mortgage backed security purchase program.  The Fed has been saying that this program, which has ensured liquidity and low rates in home lending, will end as planned on March 31st.  But there has been speculation that the Fed may add to their purchases and extend the deadline.  With the expiration nearing, the Fed’s guidance on this topic will be very important to the direction of mortgage bond prices and home loan rates.     So it is the language indicating the course of the Feds policy over the next several months rather than policy changes which will dictate the market reaction.  The Fed Funds Rate is expected to remain unchanged at this meeting.     Thank you Jill for this….together we will be keeping a close eye on the news coming from the meeting and analyzing what effect any changes could have on our clients.