If Reference Rates Drop Why Do Loan Rates Rise?
The Federal Reserve Rate Effects
The Federal Reserve interest rate is the rate at which the banks borrow amongst themselves as well as from the Federal Reserve. The interest rates keep fluctuating for many reasons. When the Federal funds rate gets reduced, it leads to a lot of borrowing and spending. This leads to an adverse effect on home equity loans and mortgage loans. The lower Federal Reserve interest rates have an effect on the home equity loan because it is a long-term loan with a long-term rate.
January 2, 2009 | Filed Under Finance | Leave a Comment