Prime Rate, 2000-2009

What is the Prime Rate?

Until December 17, 2008, the prime rate was 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 U.S. banks." On that date, it became "70% of the 10 largest U.S. banks". Regardless of the size of the reference group, the prime rate is not the 'best' rate offered by banks.

HSH uses the print edition of the WSJ as the official source of the prime rate. Many (if not most) lenders specify this as their source of this index.

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.

Any bank can declare its own prime rate. Some smaller banks will use a larger bank's prime as a reference for pricing loans, but most use the Wall Street Journal version.

Changes in the prime rate are highly correlated with changes in the federal funds rate.

Data source: Wall Street Journal (print edition)

Go to the full list of ARM Index Histories.

HSH Associates makes every reasonable effort to supply complete and accurate information, but assumes no liability for errors.