Prime Mortgage RatePrime Mortgage Rate
.. This is a short-term interest rate specified by a merchant banking institution as an indicator of the interest rate for credit to its best business clients.... Although in many cases financial institutions demand more and sometimes less than the listed key interest rate, it is a measure by which other interest levels are judged and often coded.
There are several factors why an increase in the key interest rate is generally seen as harmful to securities pricing. This is also known as the Prime. Key rate. Key interest is a measure of the interest rate on commercial and consumption credit. As an example, a local government institution can calculate your base rate plus two percent points on a home mortgage or auto-credit.
Interest rate is set by the rate of the German government's central bank, the rate that a bank charges each other to lend cash over night. Credit interest rate increases when a bank has to increase its borrowing costs. When their costs fall, they fall the base rate. There is a three-point spread between the two interest rate levels, with the key interest rate always being the higher figure.
FED's key interest rate is driven by bid and ask driven by the Fed's Open Market Committee's measures to raise or lower the amount of cash. The interest rate calculated by retail bankers for short-term lending to their preferred clients. Whilst the key interest rate is slightly lower than the other corporate lending rate, it only holds for so-called "blue-chip companies", usually large enterprises with the highest solvency.
Refer to Bank Credit, Base Rate. Tradtionally understood as the interest rate at which a bank charges its best clients. Actually, many corporate credits are listed in the form of "prime minus one quarter", for example, which suggests that there are better interest Rates than prime. Furthermore, many creditors are offering interest rate products linked to the London Interbank Offered Rate (LIBOR), resulting in interest levels below the prime.
Today, the base rate is often just an interest rate released by a bank, known as the base rate, regardless of whether it is the lower rate on offer or not.