10 ms·
No, this is the fed fund rate, which is just for banks to borrow really short term (overnight usually) to each other. Most consumer loans are based on the prime
by myoon 7y ago
No, this is the fed fund rate, which is just for banks to borrow really short term (overnight usually) to each other. Most consumer loans are based on the prime rate, which has a few points added to the fund rate to cover the cost of borrowing.
- apta 7y agoWould someone be able to negotiate a 0% loan with a bank you think?
- mandelbrotwurst 7y agoNot unless it's bundled into some other set of services with profit for the bank attached.
- dcftoapv 7y agoAdding some further nuance to this point: - Many other rates in existing contracts are tied to the fed funds rate so things like existing mortgage and student loan payments may get smaller as a result of this action - This will only work for new contracts insofar as credit risk does not materially increase (which it will in an economic downturn); banks will increase consumer spreads against the fed funds rate on a go-forward basis