The Wall Street Journal Prime Rate (WSJ Prime Rate) is defined by The Wall Street Journal (WSJ) as "The base rate on corporate loans posted by at least 75% of the nation's 30 largest banks." It is not the 'best' rate offered by banks. It should not be confused with the Federal Funds Rate set by the Federal Reserve, though these two rates often move in tandem. The current rate is 8.25% (as of 11/21/2006). The Wall Street Journal is an influential international daily newspaper published in New York City, New York with an average daily circulation of 1,800,607 (2002). ... The federal funds rate is the interest rate at which depository institutions lend balances (federal funds) at the Federal Reserve to other depository institutions overnight. ... The Federal Reserve System is headquartered in the Eccles Building on Constitution Avenue in Washington, DC. The Federal Reserve System (also the Federal Reserve; informally The Fed) is the central banking system of the United States. ...
The print edition of the WSJ is generally the official source of the prime rate. The Wall Street Journal prime rate is considered a trailing economic indicator. Many (if not most) lenders specify this as their source of this index and set their prime rates according to the rates published in the Wall Street Journal. Because most consumer interest rates are based upon the Wall Street Journal Prime Rate, when this rate changes, most consumers can expect to see the interest rates of credit cards, auto loans and other consumer debt change. Historically, in North American banking, the prime rate was the interest rate charged by lenders to borrowers who they considered most creditworthy, although this is no longer the case. ...
The prime rate does not change at regular intervals. It changes only when the nation's "largest banks" decide on the need to raise, or lower, their "base rate." The prime rate may not change for years, but it has also changed several times in a single year.
An adjustable rate mortgage or variable rate mortgage is a loan secured on a property (house) whose interest rate and so monthly repayment vary over time. ...
The Journal surveys the 30 largest banks, and when three-quarters of them (23) change, the Journal changes its rate, effective on the day the Journal publishes the new rate.
It's the most widely quoted measure of the primerate, which is the rate at which banks will lend money to their most-favored customers.
The primerate will move up or down in lock step with changes by the Federal Reserve Board.
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