What can you get for under 6.8%?

What can you get for 6.8%?  That would be the rate for a student loan as of July 1, 2013.

As of July 7, 2013 rates for other kinds of loans are:

30 year fixed rate mortgage     4.40%

15  year fixed rate mortgage     3.45%

5/1 ARM                                             3.55%

30K FICO based home equity loan     5.19%

48 month new car loan                              2.57%

In fact the only thing worse than the student loan rate is the average rate for credit cards, at 15.27%.

Now, here’s some information from the Federal Reserve about what it costs for banks to use the “discount window:”

“Federal Reserve Banks have three main lending programs for depository institutions — primary credit, secondary credit and seasonal credit. Under the program enacted in 2003, Reserve Banks establish the primary credit rate at least every 14 days, subject to review and determination of the Board of Governors.

Primary Credit Rate: 0.75%Primary credit is available to generally sound depository institutions on a very short-term basis as a backup rather than a regular source of funding. Depository institutions are not required to seek alternative sources of funds before requesting advances of primary credit.

Secondary Credit Rate: 1.25%Secondary credit is extended on a very short-term basis to depository institutions not eligible for primary credit. It is available to meet backup liquidity needs when its use is consistent with a timely return to market sources of funding or the orderly resolution of a troubled institution.”

Now, what bank wouldn’t want to borrow at 0.75% to make student loans available at 6.8%?

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