Lenders in some pans of the country reported small decreases in interest rates as a result of the Fed's most recent tightening of credit.

In Phoenix, Franklin Mortgage Co. has cut rates twice since the Fed's move.

Its 30-year mortgages now carry a rate of 8.5%, down about 0.25%.

The drop "makes some difference in business," says Mark Purcell, president of the company.

People read the papers and learn rates are falling, and are encouraged to come in, he said.

In Orlando, Jeff Vratanina said there had been a "slight improvement" in loan prices at Pinnacle Financial Corp.

While rates have not fallen for the loans his mortgage bank offers, the points that lenders charge to recoup the cost of originating loans have dropped, Mr. Vratanina, the company's president, said.

An 8.5% loan, for example, carried closing costs of two discount points before the Fed hike, he said. But now the same loan carries closing costs of one discount point.

But in Wilmington, DeL, mortgage broker Gregory K. Kushner said "everything has remained fairly flat."

Rates have fluctuated between 8% and 8.5% since June, Mr. Kushner said.

"Not that the rate is a real bad rate," Mr. Kushner said.

"But psychologically what people were used to 12 months ago was 6.5%."

Mr. Kushner sells loans to General Electric Mortgage Corp., Inland Mortgage, Countrywide, North American, and others.

"Business sure isn't what it was like 12 months ago," Mr. Kushner said.

Meanwhile, adjustable-rate mortgages, the most popular among consumers right now, rose an average of about 9 basis points to 5.66% across the nation, said Keith Gumbinger, an analyst with HSH Associates, Wayne, N.J.

"But marketplace competition is so severe, that ARMs will creep up, rather than jump up, over the next year," Mr. Gumbinger said.

On Aug. 16, the Fed raised its target for the rate at which banks make overnight loans to each other to 4.75% from 4.25%.

It also raised the rate at which it makes loans to banks to 4.0% from 3.5%.

But there has been "little improvement in fixed rates for 30-year loans, and a slight deterioration in one-year ARMS," Mr. Gumbinger said.

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