1) Federal Funds Rate: Set by the Federal Reserve's Open Market Committee, this is the rate which member banks charge for short term (usually overnight) loans. A
lowering of the rate increases the availability of credit because it becomes cheaper.
2) Wall Street Journal Prime: This is the base rate on corporate loans posted by at least 70% of the 10 largest banks in the US. Although there is no legal link, historically
this Prime is 3% higher than the Federal Funds rate. Currently, Federal Funds Target Rate is 0% to .25% and the Prime is 3.25%. Most home equity lines of credit
(Heloc) are indexed to this Prime.
3) LIBOR (London Inter-Bank Offered Rate): Average rate for dollar denominated deposits among major banks in London. Quoted for 1,3,6, & 12
months, the one month
LIBOR has ranged from .38% to 9.125% and the 12 month from 1.2 to 9.4% since September 1989.
4) Cost of Funds Index (C.O.F.I.): One of the most widely used is that of the 11th Federal Home Loan Bank District in San Francisco. Usually lags the market and is relatively
stable.
5) Treasuries: Rates for short term obligations (bills) and long term (bonds) are available on Internet <moneycafe.com
>. Advantages of a 3 or 5 year term is known debt
service.
Home | About IMF | Your Needs | Get Started | Financing Topics | Gallery | Contact Us
|
Rate of Interest
Association