(302) 703-0727

(302) 703-0727

Federal Discount Rate – What is it?

John Thomas July 23, 2007 Tags: ,
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Federal Discount Rate – What is it?

Federal Discount Rate is the interest rate charged by a Federal Reserve Bank to its eligible member banks and financial institutions when they need to borrow funds directly from the Federal Reserve.  Banks whose reserves fall below the reserve requirement set by the Federal Reserve’s Board of Governors use that money to correct their shortage.  The board of directors of each Reserve Bank sets the Discount Rate every 14 days.  Borrowing from the Federal Reserve is generally considered a last resort option for banks, which usually borrow from each other.

Federal Discount Rate

The Fed uses the Discount Rate to control the supply of available funds, which in turn influences inflation and overall interest rates. The more money available, the more likely inflation will occur. Raising the Discount Rate makes it more expensive to borrow from the Fed and this lowers the supply of available money, which increases the short-term interest rates. Lowering the Discount Rate has the opposite effect, bringing short-term interest rates down.

If you would like to apply for a Delaware Home Loan, you can APPLY ONLINE HERE, you can call John R. Thomas at 302-703-0727.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713

About John Thomas

John Thomas and his team are long-time Delaware natives. They know the local real estate market as well as they know the loan products that help them serve it. Dedicated to helping first-time buyers; the John Thomas Team are experts on first-time buyer loan programs (FHA, VA, USDA) and conduct monthly first-time buyer seminars that have been attended by more than 3000 Delaware buyers.