Rates on 30 year fixed rate mortgages dropped below 7% on Tuesday as the Fed voted to leave short term rates unchanged. In addition, the Fed announced that the possibility of a sharp downturn is now the biggest risk to the economy, a signal analysts took as indicating the Fed's intention to lower interest rates early next year.

According to Bankrate.com, the average 30-year fixed rate mortgage dropped to 6.97%, its lowest level since May 13, 1999. The 15-year fixed and one-year adjustable rates fell to 6.69% and 6.81% respectively, while the 30-year jumbo rate slid to 7.47%.

The Fed announcement nudged Treasury bond yields slightly higher. The yield on the benchmark 10-year note rose to 5.18%, a gain of 3 basis points (0.03%). The 30-year Treasury also gained 3 basis points to 5.47%

Stock prices were weighed down by falling earnings expectations and disappointment that the Fed did not act now to lower interest rates. The Dow Jones Industrial Average was off 61.05 points to 10,584.37, while the Nasdaq slid 112.81 points to 2,511.71.