Finance
The 'discount rate' used by the Federal Reserve affects Louisiana mortgage rates because:
AThe Fed directly sets all mortgage rates
BChanges in the Fed's rate influence the cost of funds for banks, which affects the rates they charge on mortgages✓ Correct
CThe discount rate equals the average mortgage rate
DThe Fed controls NFIP flood insurance rates
Explanation
The Federal Reserve's discount rate (and federal funds rate) influences the cost of borrowing for banks. When the Fed raises rates, borrowing costs increase, which generally leads to higher mortgage rates — though the relationship is indirect, especially for fixed-rate mortgages.
Related Louisiana Finance Questions
- In Louisiana, a 'subordination, non-disturbance, and attornment agreement' (SNDA) between a tenant, landlord, and lender primarily addresses what happens if the lender:
- A Louisiana homeowner applies for a home equity line of credit (HELOC). The lender will typically base the available credit on:
- In Louisiana, the 'seller's disclosure of financing terms' in an installment sale (bond for deed) must include:
- Louisiana's 'usury laws' historically limited the interest rate lenders could charge. Today, these limits are primarily relevant because:
- In Louisiana, a borrower who obtains an FHA loan with less than 10% down must pay mortgage insurance premium (MIP) for:
- In Louisiana, 'seller concessions' in a real estate transaction refer to:
- Under Regulation Z (Truth in Lending Act), a 'right of rescission' gives the borrower the right to cancel a refinance or home equity loan transaction within:
- Louisiana's 'homestead exemption from forced sale' protects:
Practice More Louisiana Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Louisiana Quiz →