WASHINGTON — The government announced Monday that it was lowering the maximum interest rate on federally backed Veterans Administration mortgages to 12% from 12.5%.
The change, which takes effect today, marks the second time in a month that the government has cut the VA mortgage rate. It puts the rate at its lowest level in almost two years.
Veterans Administrator Harry N. Walter said the latest reduction followed a decision by the Federal Reserve on Friday to lower the discount rate.
The VA rate applies to single-family home mortgages guaranteed by the VA.
The rate on home-improvement loans dropped to 13.5%, a decline of half a percentage point.