Current Prime Rate (2024)

FAQs

What is the current prime rate? ›

What Is the Current Prime Rate? As of May 20, 2024, the current prime rate is 8.50%, according to The Wall Street Journal's Money Rates table. This source aggregates the most common prime rates charged throughout the U.S. and in other countries. The federal funds rate is currently 5.25% to 5.50%.

Basic Info. Effective Federal Funds Rate is at 5.33%, compared to 5.33% the previous market day and 5.08% last year.

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 prime rate? The highest prime rate was 21.5%, reached on December 19, 1980.

Basic Info

Bank Prime Loan Rate is at 8.50%, compared to 8.50% last month and 8.00% last year. This is higher than the long term average of 6.47%.

It's possible that rates will one day go back down to 3%, though if current trends hold that's not likely to happen anytime soon.

Three months ago, one official expected six cuts and four officials predicted four cuts, reflecting that some voices on the FOMC saw a reason to go faster at the time. No more. Only one official now continues to see four rate cuts, and no official is currently expecting six rate cuts 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%.

The Federal Reserve is meeting again from April 30 to May 1, 2024, and consumers are looking to see if interest rates will be lowered. At its March 2024 gathering the Fed decided to keep the federal funds target rate at 5.25% to 5.5%, where it has remained since July 2023.

Why were interest rates so high in the 80s? ›

The reason interest rates, which ultimately are set by the Federal Reserve, exploded in 1980 was housings' arch nemesis, runaway inflation. The Fed funds rate, which is the rate banks charge each other for overnight loans, hit 20 percent in 1980, and 21 percent in June 1981.

When inflation is high, the government raises rates to deter borrowers from taking loans in an effort to reduce spending. The current price of goods might skyrocket by the time the borrower pays it back. This will reduce the lender's purchasing power. When the demand for credit is high, so are interest rates.

If you lock in a fixed mortgage rate with a lender, the prime rate won't affect the rate you receive. Specifically, fixed-rate mortgages are usually lower than the prime rate because lenders sell mortgages to major mortgage investors, such as Fannie Mae and Freddie Mac.

The Wells Fargo Prime Rate is 8.50% as of 07/27/2023.

The prime rate is the best interest rate you can get, and it's influenced by the economy. When you apply for a financial product, including credit cards, personal loans and auto loans, lenders will charge you interest based on what kind of risk you pose to them.

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%.

In slower economies, the FOMC tries to keep the federal funds rate low to encourage borrowing, which leads to spending and investing, but when the economy grows quickly, the FOMC might raise the rate to offset and balance the economy. The prime rate, in turn, is based on the federal funds rate.

The current prime rate is 8.50%, unchanged since it increased from 8.25% on July 27, 2023.