Back to Glossary
Base Rate
Updated
January 19, 2023
A base rate refers to the interest rate a central bank - like the Federal Reserve - will charge commercial banks during a transfer of funds. While most banks are free to set their own interest rates for lending money, the overall rates charged on mortgages and other loans are influenced by the base rate of a Central Bank. This allows central banks like the Federal Reserve to encourage or discourage spending depending on the state of the US economy.
Related Topics
Payment and Debt Ratios
Home Value: Appraised, Estimated, Actual
How Much of a Mortgage Payment Goes to Principal
What Do Underwriters Do?
What Does Loan Underwriting Mean
Loan To Value and Down Payments
What is Underwriting in Real Estate?
Homeowner's Guide: DIY Home Improvement