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Prime Rate

The Prime Rate is the interest rate charged by banks for short-term loans to their most creditworthy customers whose credit standing is so high that little risk to the lender is involved. Only a small percentage of customers qualify for the prime rate, which tends to be the lowest going interest rate and thus serves as a basis for other, higher risk loans.

The rate is almost always the same amongst major banks. Adjustments to the prime rate are made by banks at the same time; although, the prime rate does not adjust on any regular basis. The prime rate is not very volatile index however it generally rises quickly but declines very slowly.

Prime Rate vs. 1-Yr CMT
Prime Rate vs. 1-Yr CMT, 2006-2014  { Obtaining Permission to Reproduce }

Many home-equity loans and lines of credit are tied to the prime rate as published in the Wall Street Journal. The Journal number is derived from the rate posted by at least 75 percent of the 30 largest U.S. banks.

The current prime rate is posted in our Current Mortgage Indexes table.

A complete history of the specific dates on which the Prime Rate changed starting from December of 1947 is posted on our web site: Prime Rate History.

Historical Graph

Prime Rate vs. 1-Yr CMT, 1948-2013
Prime Rate vs. 1-Yr CMT, 1948-2013 { Obtaining Permission to Reproduce }

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