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The Reduction In Mortgage Home Loan Interest Rates
Mortgage and Home Loans - The Federal Reserve slashed 50 basis points off both the "federal funds rate" the rate banks charge each other for overnight loans and the discount rate, the rate the Fed charges for direct loans to banks.
The reduction in the target for the federal funds rate, to 4.75 percent, marked the first time the Fed had cut the overnight rate since June 25, 2003. At the time, the Fed was capping a series of reductions intended to encourage borrowing and stave off a recession after the dot-com stock market bust and the Sept. 11, 2001, terrorist attacks.
Lowering the federal funds rate "is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time."
The Federal Reserve's Board of Governors also unanimously approved a 50-basis-point reduction in the discount rate, to 5.25 percent.
The Fed slashed the discount rate from 6.25 percent to 5.75 percent on Aug. 17, in part because mortgage lenders have been having trouble obtaining short-term funding.
Ahorre October 18, 2007 11:37 PM | About Mortgage and Home Loans | Business | Franchise Business