I make a point of showing the discount rate changes by the Fed don’t translate to mortgage rate changes. I do so because many people think the discount rate does directly effect mortgage rates. But the Fed announced today, actions that actually do impact mortgage rates.
Federal Reserve to Buy $1.2T in Bonds, Mortgage-Backed Securities
If you are looking at refinancing your mortgage now (or soon) might be a good time, rates were already very low and will be declining. And if you own long term bonds you just got a nice increase in your value (bond prices move up when interest rates move down).
Related: Lowest 30 Year Fixed Mortgage Rates in 37 Years – Low Mortgage Rates Not Available to Everyone – Why do we Have a Federal Reserve Board?
Comments
3 Comments so far
The original announcement caused a dramatic move but since then yields have been drifting up, every day, including today. Rates were already very low…
Can some one please tell me, Can the fed purchase Government T-Bills, bonds or notes?
I read somewhere recently that they do not and can not …. But I would like to know more about that subject.
Thanks Mike
…Granted the USA had a huge surplus of wealth built up since the end of World War II. The USA has to a great extent sold off that wealth to finance living beyond the productive capacity of the country the last 20-30 years…