Not so fast! While you may think mortgage rates will drop if the Fed lowers interest rates as expected, in reality mortgage rates may be poised to go up, as they have after the most recent Fed actions.

Bob Walters, chief economist at Intuit's (NASDAQ: INTU) Quicken Loans, the nation's leading online mortgage lender, offers consumers a few reasons why mortgage rates sometimes rise when Greenspan and the Fed lower rates:

• When the media says Greenspan lowered "rates," what they mean is that a very specific rate, called the Federal Funds rate, has been lowered. This is a rate at which large banks lend to one another, often for very short periods of time. Mortgage rates are often much longer term rates - up to 30 years.
• Longer term rates are very sensitive to expectations about inflation. If short term rates, like those the Federal Reserve controls, are falling, this can encourage borrowing and spending, which can actually cause inflation to rise. Longer term rates, like mortgage rates, often rise if concerns about inflation increase. In fact, mortgage rates are actually more closely tied to the 10-Year Treasury rates.

"We anticipate that long term mortgage rates could rise if the Fed's action sparks a summer rally in the stock market, which will cause money to flow out of bonds and into stocks," says Dan Gilbert, Quicken Loans CEO. "This would cause bond yields to rise, which causes long term mortgage rates to go up. "

There is a bright side to this picture. The steeper yield curve caused by the disparity between short and long-term rates has made shorter term adjustable rate mortgages very attractive.

"In this scenario," says Gilbert, "Consumers might want to consider a three or five-year adjustable rate mortgage. Locking in a lower mortgage rate for three or five years could make sense because most people do not stay in a home more than five years, and those who do can refinance later."

"It's almost impossible to accurately predict the future of something as complex as the U.S. economy," says Walters. "Markets are often ahead of the Federal Reserve. Interest rates are determined every day in very active public markets. If those markets believe the economy will be stimulated by the lower rates and increase the money supply, longer term interest rates may rise as the markets increase rates to defend their real yield from the erosion of inflation. The opposite can happen as well. Mortgage rates can fall well ahead of the Fed lowering short term rates.

"Mortgage consumers need to understand some of these market dynamics. Sometimes not understanding the markets can cause consumers to wait too long, costing them money."

To learn more about how today's market rates can impact buying power or refinancing options, mortgage consumers can visit the Home Purchase and Refinance Centers at www.quickenloans.com. Both contain educational content explaining the mortgage process and calculators that can help consumers calculate the amount of home they can afford based on today's rates, or the potential savings achieved by refinancing.

About Quicken Loans
Quicken Loans Inc., a leading provider of direct-to-consumer home loans on the Internet, offers mortgages in all 50 states. The company provides a wide variety of home financing options including conventional, government, alternative, home equity and jumbo loans.

Quicken Loans combines technology and high touch personal service to give consumers a convenient one-stop mortgage lending experience on the Internet. More than 700 experienced mortgage professionals at the Quicken Loans' Web/Call Center work directly with consumers throughout the entire process to help close their loans quickly. The Web site also educates and empowers consumers through timely interactive tools and information related to the home financing process. Quicken Loans is a wholly-owned subsidiary of Intuit Inc.