[frogjerk]

Interest rates should not be set by the FED. It is not their job. Interest rates should be set by the market.

[SaxxonWoods]

“Interest rates should not be set by the FED. It is not their job. Interest rates should be set by the market.”

The FED only sets one rate, the overnight banking rate.

Banks/Mortgage companies set mortgage rates based on the spread they desire above the 10yr Treasury rate. The 10yr rate is set by traders in the Bond Market. The spread used to approximately 1.5%. I’ve asked mortgage people why that spread is now closer to 3% but no one can answer.

Using the old spread, the 30yr mortgage would be around %5.4 today.

[MeganC]

“Interest rates should not be set by the FED. It is not their job. Interest rates should be set by the market.”

That market ended when the Fed started issuing all the funds to back loans. This is why a lot of banks don’t want to bother with personal checking/savings accounts.

Banks used to depend upon deposits as a source of funds for loans and now the Fed does all of that.

So the Fed gets to set the interest rates on the money it farts out and then loans.

[TexasGator]

“Interest rates should not be set by the FED.”

The fed does not set interest rates.

“Interest rates should be set by the market.”

The market sets interest rates.

[Georgia Girl 2]

The Fed sets the rate that it loans to other banks not mortgages.