Fed Rate vs. Interest Rate, what’s the difference?

Understanding the Fed Rate: What It Is and How It Works
The Federal Reserve (Fed) rate is the interest rate banks charge each other for overnight loans. The Fed sets this rate to influence economic activity. When inflation rises or the economy grows too fast, the Fed raises the rate to make borrowing more expensive, slowing spending. When the economy slows, the Fed lowers the rate to encourage borrowing and boost growth.

Fed Rates vs. Consumer Interest Rates: Key Differences
While the Fed rate sets a benchmark, consumer interest rates—like mortgages—are influenced by several factors. Banks adjust their rates based on the Fed’s moves, along with inflation and credit demand. When the Fed raises rates, banks usually follow, making loans more expensive. This directly affects homebuyers and those seeking personal loans.

How Fed Rate Changes Affect the Housing Market
Changes in the Fed rate impact the housing market. When the Fed raises rates, mortgage costs rise, reducing home affordability and demand. This can slow price growth. When the Fed lowers rates, mortgages become cheaper, boosting demand and often increasing home prices, benefiting sellers.

Have Real Estate Questions? Contact Me Today!
If you’re wondering how Fed rate changes affect your home-buying or selling decisions, or if you have other real estate questions, feel free to reach out. With the right advice, you can confidently navigate the housing market. Whether buying, selling, or exploring options, I’m here to help. Let’s talk about how we can meet your real estate goals in today’s market.

Kara Sasser

Licensed Real Estate Agent

S-60408 
CENTURY 21 Alliance

6555 US-98 Suite#25, Hattiesburg, MS 39402

O: 601.255.5131 | C: 601.641.0568

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