| Prime Rate |
| What is the Prime Rate? In
definition the prime rate is the published interest
rate at which banks make short-term unsecured loans to their
best customers. The
prime rate is quite consistent among the major banks however
a few may differ depending on internal policies. The prime
rate does not adjust on an regular basis however when it
does financial
institutions tend to adjust their rates at the same time. |
|
| LIBOR Rate |
| LIBOR stands for "London Inter-Bank
Offered Rate." The LIBOR index is based on rates that contributor banks
in London offer each other for inter-bank deposits. LIBOR is commonly used as an index for adjustable rate
mortgages and commercial loans. Although many LIBOR
rates are published most US loans are based on the LIBOR
rates published in the Wall Street Journal (i.e. one month,
one year
and six month LIBOR rates) |
|
| Mortgage Rates |
| Changes in the Prime Rate affects
many type of mortgages with the greatest impact on
Home
Equity Lines. Many consumers have home equity lines tied to the prime rate
(ex. Prime
+ one) - This means the interest rate your loan payments
are based on will be the
prime rate + one percent. Movements in the prime rate
can drastically affect your loan payments (up or down)
depending on the home loan terms you have. |
|
