Fed Chairman Ben Bernanke caused some turmoil in the bond market last week with his remarks that followed the Fed meeting. The Fed kept rates unchanged and did not deviate much from their prior position to hold rates low until unemployment falls below 6.5%. However, Bernanke followed that release with a warning that the Fed could adjust the size of monthly bond purchases in response to changing economic conditions. That ignited trader fears. Mortgage bond prices saw a significant sell-off which sent prices lower and mortgage interest rates higher that afternoon. The Fed has purchased trillions of dollars of Treasury and mortgage bonds in an effort to keep rates low. A deviation from that practice will result in additional rate volatility. Rates have been historically low for a very long time. At some point this situation will inevitably change. If interest rates are an important factor in your buying decision, you'll want to keep an eye on The Fed going forward.
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