No single repo rate exists for all repurchase agreements. The particular repo rate depends upon a number of factors.

• If the availability of the collateral is limited, the repo rate will be lower. The lender may be willing to accept a lower rate in order to obtain a security they need to make delivery on another agreement.
• The repo rate increases as the credit risk of the borrower increases (when delivery is not required).
• As the quality of the collateral increases, the repo rate declines.
• As the term of the repo increases, the repo rate increases. It is important to note that the repo rate is a function of the repo term, not the maturity of the collateral securities.
• If collateral is physically delivered, then the repo rate will be lower. If the repo is held by the borrower’s bank, the rate will be higher. If no delivery takes place, the rate will be even higher.
• The federal funds rate, the rate at which banks borrow funds from one another, is a benchmark for repo rates. The higher the federal funds rate, the higher the repo rate.
• As the demand for funds at financial institutions changes due to seasonal factors, so will the repo rate.