Ben Bernanke just surprised many by dropping both the Fed Funds and the Discount Rate by .5%. It’s too soon to tell how this may impact mortgage interest rate. My thought is that this is more of an economic booster than anything, but if I were a bettin' woman my money would be on the fact that it will bring mortgage rates down slightly...remember - interest rates are still really low historically.
Word to the wise - DO NOT think that we are going to see a direct drop in mortgage interest rates by .5%! The Fed Funds rate refers to what banks charge each other for overnight loans...The discount rate applies to short term funds the Fed makes available to banks to smooth liquidity problems...like I said, economy boosters...
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