Finance
The Federal Reserve's monetary policy affects Utah mortgage rates primarily by:
ADirectly setting the 30-year mortgage rate
BInfluencing short-term interest rates and bond markets, which indirectly affect mortgage rates✓ Correct
CRequiring banks to charge a minimum interest rate
DBuying mortgages directly from Utah homeowners
Explanation
The Federal Reserve's decisions on the federal funds rate influence short-term rates and bond markets. Since mortgage rates are tied to the 10-year Treasury yield, Fed policy indirectly affects 30-year fixed mortgage rates, impacting Utah home affordability.
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Key Terms to Know
Adjustable-Rate Mortgage (ARM)
A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Fiduciary DutyThe highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
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