Interest Rates and Loans

As expected, the Federal Reserve Bank cut the prime interest rate Tuesday.
Some lenders say that could be good news for people in the Valley trying to borrow money.

Some think the rate change could help lower rates on housing loans. The interest rate that was cut was the Federal Discount Rate, which is the rate banks charge each other to borrow money.

Experts say there can be a trickle down effect to consumers. They say mostly its a sign that the government is trying to prevent a recession.

Richard Halterman, Allied Home Mortgage, says, "The biggest reason the Fed has that rate in place is to control inflation. That's their first and foremost goal for moving that around, as inflation they'll increase that rate, slowing down the economy, slowing down inflation."

The bottom line for people seeking loans is that the lower rate can influence other rates, which can help the economy grow. Many people would like to see growth in the housing market.


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