We hear so much about the Federal Reserve changing rates, creating ripples across every financial institution. Cornerstone Bank feels those changes too. We want to make sure you understand how that works, and why, since interest rates affect mortgages for home and business.
We’ll always be transparent, so that you can make informed decisions regarding your current investments, and your future.
Interest rates involve two components.
Federal funds rate vs prime rate
You’ve probably heard of the “prime rate” on the news. It’s the rate that banks like Cornerstone Bank use to determine borrowing costs. The prime rate affects interest rates on things like credit cards, as well as interest earned on things like savings accounts.
But what is the “federal funds rate?” This is what banks charge each other to borrow money. The federal funds rate affects the prime rate, because if it costs more for a bank to borrow money for lending, it costs more for you to get a loan.
The federal funds rate is controlled by the Federal Reserve, aka “the Fed.”
Why would the federal funds rate increase?
The Fed is tasked by our government with helping the economy to keep job growth happening and to help control inflation.
When the Fed raises the federal funds rate, it’s usually to cool off inflation. With higher interest rates, people tend to spend more conservatively, driving down prices so that consumers will buy the product/service. These changes are how interest rates affect mortgages in the long run.
The more you know, the more you can grow
We’re not only a resource for business capital, we’re a knowledgeable friend who can help you navigate multi family loan options for just the right fit. We take pride in watching our customers thrive!
Since 2001, we have been a helpful partner to our customers across the Kansas City metro area, as well as the nation. We’re always available to respond to your questions and concerns. Find out why our customers stay with us for so many years.
Try one of our online tools to help you determine the accounts and loans that would best suit your needs. Or if you prefer, visit our Overland Park office, give us a call at 913-239-8100, or send us a message to let us know how we can help.