In a surprise move, The Fed lowered their Discount Rate by a half percent this morning. The Discount Rate is the rate at which the Fed lends money directly to commercial banks, credit unions and large lenders. It is different than the Fed Funds Rate, which is the rate at which banks lend money to other banks. Although the cut provides some liquidity relief for lenders it does not directly affect mortgage rates. This cut, along with the extension of the borrowing period from overnight to 30 days, could allow time for the credit markets to settle a bit and help some large financial institutions better weather the storm.