Prime Rate Articles from HOMEOWNERSHIP.INFO Free Article Directory

Search our Site:

Prime rate is a term applied in many countries to a reference interest rate used by banks. The term originally indicated the rate of interest at which banks lent to favored customers, though this is no longer always the case. Some variable interest rates may be expressed as a percentage above or below prime rate.

Historically, in North American banking, the prime rate was the interest rate although this is no longer the case. The prime rate varies little among banks, and adjustments are generally made by banks at the same time, although this does not happen with great frequency. The prime rate is currently 5.00% in the United States, according to data published by The Wall Street Journal Online and the Federal Reserve Bank.^[1] Canadian prime rate is currently 4.75% according to data published by Bank of Canada^[2].

In the US, the prime rate runs approximately 300 basis points (or 3 percentage points) above the federal funds rate, the interest rate that banks charge to each other for overnight loans made to fulfill reserve funding requirements. (The Federal funds rate plus a much smaller increment is frequently used for lending to the most creditworthy borrowers today, as is LIBOR, the London Interbank Offered Rate.) The Federal Open Market Committee (FOMC) meets eight times per year wherein they set a target for the federal funds rate. Other rates, including the Prime Rate, derive from this base rate.

The most commonly recognized prime rate index is the Wall Street Journal Prime Rate (WSJ Prime Rate), published in the Wall Street Journal. Unlike other indexed rates, the prime rate does not change on a regular basis; rather, it changes whenever banks need to alter the rates at which borrowers obtain funds. The WSJ defines the prime rate as "The base rate on corporate loans posted by at least 75% of the nation's 30 largest banks."

Prime Rate Subcategories Prime Rate Articles subprime mortgage update by anthony alston Jan 10, 2008 Subprime mortgages have now been credited for bankrupting well over 110 lenders and seriously damaging operations at many major mortgage firms. They've reportedly wiped out 5 hedge funds, tens of thousands of jobs, and have led to millions of foreclo... President Bush say on Foreclosures. by yaniv raz Dec 17, 2007 The U.S Government is finally taking action to relief homeowners with sub-prime mortgages. Experts say the initiatives are designed to ease foreclosure fears and help the economy, not to bail out lenders.  In an anticipated announcement President Bu... Is Another Fed Cut Inevitable? by Dane Smith Nov 14, 2007 As many Americans continue to default on their mortgages at record levels, other markets throughout the world are becoming extremely volatile. Most of the defaults were exacerbated by the Federal Reserve's aggressive interest rate hikes over the p... Could Fixed-rate Mortgages and Debt Consolidation Loans Be The Answer To The US Sub-prime Problems? by Chris Gardner Sep 26, 2007 If you've been watching the news or reading the newspapers recently then you are probably only too aware of the recent troubles in the US economy, caused by the collapse of the US sub-prime market. Most dips and rises in the US financial markets are ... 9/12/07 Oil hits 80, British mortgage rates on the rise, and what Bernanke won't tell you on Monday by Andrew Rideout Sep 12, 2007 This is a selection of today’s most popular blog articles from Inveslogic.com where you will find the highest-rated stock market and investment blogs, videos and podcasts on the web. Production decline sends oil o... Fix it and Flip it - How I Lost Money on Real Estate by Jonni Good Jul 16, 2007 I've known a lot of people who have lost money when they sold their homes. In fact, I'm one of those people, and it's happened to me more than once. There are a number of factors can cause a financial loss when you sell your house, including... First-Time Buyers - Why You Should Spend Less Than You Can Afford for Your New House by Jonni Good Jul 12, 2007 Almost all first-time home buyers find that their income will only allow them to qualify for a fixed-rate mortgage that will buy a house that is smaller or less desirable than the house they've been dreaming about. When they discover this limitation,... Solutions for the Subprime Lending Crisis by Dave Dinkel Jun 27, 2007 There are solutions for the subprime lending crisis that entail making changes to the way lenders are handling this crisis. There are distinct groups of individuals that are causing this foreclosure epidemic. First, there is the homeowner who got a ... The Real Casualties of Subprime Lending by David Dinkel Jun 02, 2007 Subprime lending has recently caused over 56 lenders to either go out of business or stop issuing subprime loans because of excessive foreclosure rates. The lending community made decisions in the last few years that dramatically eased a borrower's ... Belonging to the Sub-Prime Market and Obtaining Fair Home Equity Loan Interest Rates by Joel Cohen May 18, 2007 Poor credit rated consumers find them confused before applying for a home equity loan. The local Bank they work with will not agree to lend the money because they think that the borrower won't be able to pay back the loan and therefore, in risk. It i...