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Loan At Prime |
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Dear Edith, Could you please explain to me about the prime rate? How long does it last, for one week, one month or longer? I am looking at a home equity line of credit. After a six-month period at 1.49 it will go to the prime rate. Please explain. |
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The prime rate is the interest rate banks charge their best customers, usually commercial borrowers. At any given time, most banks have the same figure for prime.It doesn't change on any specific date, but fluctuates with general interest rates and usually depends on what the Federal Reserve does. A couple of years ago it was almost 10 percent; currently it's a bit below five. Right now it's a pretty good rate for a mortgage, assuming you don't mind the risk of rate adjustments in the future. These days, though, I believe a borrower with excellent credit can sometimes find a home equity loan at a bit below prime. |
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Edith
Originally published on February 27, 2005 |
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