What is the Prime Rate?
The prime rate is defined by The Wall Street Journal (WSJ) as "The base rate on corporate loans posted by at least 70% of the 10 largest U.S. banks." It 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.
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.
When does the prime rate change?
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.
Changes in the prime rate are highly correlated with changes in the federal funds rate. The prime rate typically changes a day or so after a change in the federal funds rate.
What is the current prime rate?
The current prime rate is 8.50%. It last changed on July 27, 2023.
Data source: Wall Street Journal (print edition)
Current and Historical Data
| Date of Change | Prime Rate |
|---|
04-Mar-20 | 4.25% | | 16-Mar-20 | 3.25% |
| 17-Mar-22 | 3.50% |
| 05-May-22 | 4.00% |
| 16-Jun-22 | 4.75% |
| 28-Jul-22 | 5.50% |
| 22-Sep-22 | 6.25% |
| 03-Nov-22 | 7.00% |
| 15-Dec-22 | 7.50% |
| 02-Feb-23 | 7.75% |
| 23-Mar-23 | 8.00% |
| 04-May-23 | 8.25% |
| 27-Jul-23 | 8.50% |
What was the highest prime rate?
The highest prime rate was 21.5%, reached on December 19, 1980.
What was the lowest prime rate?
The lowest prime rate since 1975 is 3.25%. This occurred on two occasions: December 16, 2008 and March 16, 2020.
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.
FAQs
Historical Prime Rate
| Effective Date | Rate |
|---|
| 3/17/2022 | 3.50% |
| 3/16/2020 | 3.25% |
| 3/4/2020 | 4.25% |
| 10/31/2019 | 4.75% |
21 more rowsPrime Rate History
| - Click Here for The Current U.S. Prime Rate - |
|---|
| November 7, 1975 | 7.50 |
| December 2, 1975 | 7.25 |
| January 12, 1976 | 7.00 |
| January 21, 1976 | 6.75 |
183 more rowsAs a result, prime rate revisions in 1976 were less frequent than in any other year since the introduction of the formula prime in 1971. During 1976 the prime rate fluctuated within a narrow band of 11/4 percentage points, starting the year at or near 71A percent and ending 1976 at 6 percent.
Is prime rate going down in 2023? ›
Interest rates have held steady since July 2023.
The Federal Reserve has decided to hold interest rates steady after its meeting on June 11 and 12, 2024. The federal funds target rate has remained at 5.25% to 5.5% since July 2023. To combat inflation, the rate was raised 11 times between March 2022 and July 2023.
What are the historical interest rates? ›
Interest Rate in the United States averaged 5.42 percent from 1971 until 2024, reaching an all time high of 20.00 percent in March of 1980 and a record low of 0.25 percent in December of 2008.
What is the current Fed prime rate today? ›
Prime rate, federal funds rate, COFI
| This Week | Year Ago |
|---|
| Federal Discount Rate | 5.5 | 5.25 |
| Fed Funds Rate (Current target rate 5.25-5.50) | 5.5 | 5.25 |
| WSJ Prime Rate | 8.5 | 8.25 |
The highest prime rate in history was on December 19, 1980, standing at a record-breaking 21.5%. The Federal Reserve set the federal funds rate guidance to sustain the 21.5% prime rate until January 1, 1981. By contrast, the lowest prime rate in history was set on March 16, 2020, at 3.25%.
Is the prime rate going down in 2024? ›
The general consensus among industry professionals is that mortgage rates will slowly decline in the last quarter of 2024. The projected declines have shrunk, though, in recent months. At the start of the year, for instance, Fannie Mae predicted rates would drop to 5.8%.
What was the federal interest rate in 1975? ›
Federal Funds Rate - 62 Year Historical Chart
| Federal Funds Rate - Historical Annual Yield Data |
|---|
| Year | Average Yield | Annual % Change |
|---|
| 1976 | 5.05% | -22.35% |
| 1975 | 5.82% | 38.76% |
| 1974 | 10.51% | -60.63% |
67 more rowsInterest rates had to climb higher to compensate for the ravages of inflation. In the late 70's and early 80's, the Federal Reserve attempted to choke off inflation by repeatedly raising the Fed funds rate until it hit 21 percent.
Generally, the prime rate is about 3 percent higher than the federal funds rate. That means that when the Fed raises interest rates, the prime rate also goes up. The prime rate is the rate at which individual banks and credit unions lend to their customers, including large corporations.
What was the highest interest rate in the 1970s? ›
Rates in 1971 were in the 7.5% range, and they moved up steadily until they were at 10.03% in 1974. They briefly dipped into the mid- to high 8% range before climbing to 12.9% in 1979. This was during a period of high inflation that hit its peak early in the next decade.
Will mortgage rates ever be 3% again? ›
In summary, it is unlikely that mortgage rates in the US will ever reach 3% again, at least not in the foreseeable future.
What will interest rates look like in 5 years? ›
MBA: Rates Will Decline to 6.6% In its June Mortgage Finance Forecast, the Mortgage Bankers Association predicts that mortgage rates will fall from 7% in the second quarter of 2024 to 6.6% by the fourth quarter. The industry group expects rates will fall to 6% at the end of 2025 and will average 5.8% in 2026.
Does prime rate go up in recession? ›
Do Interest Rates Rise or Fall in a Recession? Interest rates usually fall during a recession. Historically, the economy typically grows until interest rates are hiked to cool down price inflation and the soaring cost of living. Often, this results in a recession and a return to low interest rates to stimulate growth.
What is the US bank prime rate today? ›
US Bank Prime Loan Rate is at 8.50%, compared to 8.50% the previous market day and 8.25% last year.
What is the current Fed rate? ›
Right now, the Fed interest rate is 5.25% to 5.50%. The FOMC established that rate in late July 2023. At its most recent meeting in June, the committee decided to leave the rate unchanged.
