Article: Link to Prime Keeps Rates High on Equity Loans

Despite sharp declines in mortgage rates that have triggered the current refinancing boom, large numbers of American home equity line borrowers still are making monthly loan payments tied to a rate that hasn't budged in nearly a year: The prime bank rate that 90 percent of all home equity lines of credit use as their rate baseline.

If you've got an equity line tied to prime, consider this: The prime rate isn't so prime anymore, not when average homeowners can pick up the phone and get a 30-year, fixed-rate, first mortgage at 7 percent.

Prime, by contrast, has been frozen by banks at 8.5 percent since March 1997. Most home equity line formulas tie their adjustable rates to prime, ...

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