Wednesday, October 31, 2007

The Federal Reserve Lowers the Discount Rate

The Fed lowered the discount rate .25% today. Whenever people hear this on the news, they call and ask if that means they can have a better interest rate on their loan. But interestingly, this action doesn't necessarily translate into better rates for the mortgage consumer -- at least it didn't today. Because investors have interpreted the Fed's message as "it's a good time to invest in stocks," the bond market is not doing as well this afternoon, and mortgage interest rates offered generally correlate with bond market activity.

But rates change often, so perhaps tomorrow will be our day.

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