If the fed interest rate is 3.75-4%, why is the average mortgage rate above 7% and most savings accounts are below 3%?

Question

If the fed interest rate is 3.75-4%, why is the average mortgage rate above 7% and most savings accounts are below 3%?

In: 2

Answer 1

Because banks exist to generate profit, so when they loan you money, you pay a lot of interest, and when you loan them money (your deposits) they pay a little interest.