how do the federal reserve and the banks affect eachother?
2007-09-18 09:09:24 · 4 answers · asked by junebug 1 in Business & Finance ➔ Taxes ➔ United States
The fed rate is the rate that banks can borrow money from other banks. The rate at which you borrow money from a bank is usually that fed rate plus a few points, because you are riskier investment to them. So if you get a loan now, it should have a better rate than what you would have got if you took out the same loan last month.
However, a lower federal rate will should also lower bond rates and CD rates.
2007-09-19 02:12:20 · answer #1 · answered by tightlies 3 · 0⤊ 0⤋
If you already have a fixed-rate loan in effect, it won't change the rate on that loan. If you have a variable-rate loan, it might lower your interest rate depending on what your interest rate is based on.
If you are getting a new loan, eventually loan rates might (or might not) come down a little.
2007-09-18 22:16:43 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
Do you have a mortgage with your pay that you pay? Is it an adjustable rate mortgage that varies with and index? If so, you mortgage payment may go down.
2007-09-18 18:58:03 · answer #3 · answered by William H 5 · 0⤊ 0⤋
It will probably have not effect on you.
2007-09-18 17:16:01 · answer #4 · answered by Anonymous · 0⤊ 0⤋