Finance
The Federal Reserve's monetary policy affects mortgage rates primarily through:
ASetting fixed mortgage rates directly
BInfluencing short-term interest rates, which affect the cost of funds for lenders✓ Correct
CApproving all mortgage applications
DSetting the conforming loan limit annually
Explanation
The Federal Reserve sets the federal funds rate, which influences other interest rates including prime rate and indirectly long-term mortgage rates. When the Fed raises rates, mortgage rates typically increase.
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