The Prime Rate is the interest rate charged by banks for short-term loans to their most
creditworthy customers. It is also used by lenders as an index for equity lines of credit (HELOCs) in addition to other floating rate loans. Each bank sets their own Prime Rate as they see fit. The Wall Street Journal publishes the Prime Rate that is the base rate on corporate loans posted by
at least 75% of the nations largest banks.If Alan Greenspan and the Federal Reserve raise the short term interest rates by 25%, you will see a 25% increase in the Prime Rate.
While the Prime Rate affects Home Equity Loans and short term money, the 30 year fixed mortgage is based off of the mortgage backed security.
A rate index which is the prevailing rate that banks charge to lend money to corporations.
