What is the prime rate today, and how does it set HELOC rates?

The prime rate is the index most variable HELOCs are built on. Here is where it stands, where it came from, and what a change does to your payment.

Reviewed by Shawn Way, NMLS #1007298★ 4.9 from 111 reviewsUpdated October 28, 2026

What the prime rate is

The prime rate is the base rate banks use to price many variable-rate loans, including most HELOCs, many credit cards and some business loans. The version lenders quote in HELOC agreements is usually the "Wall Street Journal prime rate," a published survey of what large U.S. banks charge.

By convention, WSJ prime sits exactly 3 percentage points above the upper bound of the Federal Reserve's federal funds target range. The Fed doesn't set prime directly, but when the Fed moves its target range, banks move prime by the same amount, usually right away. That's why prime changes only around Fed decisions and otherwise holds still for months at a time.

• Prime today: 7.00%
• Last change: September 17, 2026
• Next scheduled Fed meeting: October 28, 2026

Recent prime rate changes

Every move in prime over the period below lined up with a Fed decision. Variable HELOC rates followed each change point for point.

How prime sets your HELOC rate

A variable HELOC rate has two parts:

• The index, almost always prime. It changes when the Fed moves.
• The margin, a fixed number of points added to the index. Your lender sets it when you open the line, based on things like credit score, combined loan-to-value and the size of the line. It doesn't change for the life of the line.

Your rate is index plus margin. With prime at 7.00%, a margin of 0.75 point gives you prime + 0.75, and a margin of 0 gives you a rate equal to prime. Some lines start with a lower introductory rate for a few months, then switch to prime plus the margin. Many agreements also include a floor (a rate the line can't go below) and a lifetime cap. See HELOC rate caps and floors for how those work, and HELOC rates today for typical margins by credit score.

Example: what a 0.25-point prime change does to a payment

These are illustrative numbers, not a quote. Suppose you owe $100,000 on a variable HELOC and your rate is 8.00% (assume prime plus a 1-point margin, with prime at 7.00%).

During the draw period, paying interest only:

• At 8.00%: $100,000 × 0.08 ÷ 12 = $666.67 a month.
• If prime rises 0.25 point, your rate becomes 8.25%: $100,000 × 0.0825 ÷ 12 = $687.50 a month.
• Difference: $20.83 a month, or $250 a year. A 0.25-point cut saves the same amount.

The rule of thumb for interest-only payments: each 0.25 point on $100,000 is about $20.83 a month. A full 1-point move is about $83.33 a month. Scale it to your balance: on $50,000, halve those numbers.

During the repayment period, paying principal and interest over 20 years:

• At 8.00%: about $836.44 a month.
• At 8.25%: about $852.07 a month.
• Difference: about $15.63 a month.

The amortizing payment moves less because more of it is principal, which doesn't change with the rate. Run your own balance in the HELOC payment calculator, and see how HELOC interest is calculated for the daily-balance math.

What happens at the next Fed meeting

The Fed's next scheduled meeting is December 9, 2026. Nobody can tell you in advance what it will decide, and we don't make rate predictions. What we can tell you is how each outcome flows through to a HELOC:

• The Fed raises its target range: prime goes up by the same amount, and so does every variable HELOC tied to prime.
• The Fed cuts: prime goes down by the same amount, and variable HELOC rates fall with it, unless a line has already hit its rate floor.
• The Fed holds: prime stays at 7.00%, and variable HELOC rates stay where they are.

When the new rate reaches your bill depends on your agreement. Many HELOCs adjust on the next billing cycle or a set monthly date after prime changes. Your statement or agreement will say when. A fixed-rate portion of a line, or a fixed-rate HELOC, doesn't move with prime at all.

What this means if you have, or want, a HELOC

• You don't need to time prime. On a variable line, a future cut lowers your rate automatically. There's no refinance and no new application.
• The margin is the part you negotiate. It stays with the line for as long as you have it, so compare margins and fees when shopping, not just the starting rate.
• Budget for movement. If your budget only works at today's payment, consider fixing part of the balance or borrowing less.

Related question: What is a good HELOC rate?

Related question: HELOC rate history

Questions people ask

Who sets the prime rate?

Individual banks set their own prime rates, but large banks move together. The Wall Street Journal publishes the consensus, which lenders use as the index in most HELOC agreements.

Why is the prime rate 3 points above the fed funds rate?

A long-standing banking convention, not a law, keeps the prime rate 3 points above the fed funds rate. Since the mid-1990s, WSJ prime has held at the fed funds target upper bound plus 3 points.

How often does the prime rate change?

The prime rate changes only when the Fed changes its target range, which can happen at any of its eight scheduled meetings a year or, rarely, between meetings. Prime can stay the same for a year or more.

Is my HELOC rate the same as the prime rate?

Usually not. Most HELOC rates are prime plus a margin, so your rate is higher than prime unless your margin is zero. Some lines also have an introductory rate below prime for the first months.

Will my HELOC payment go down if the Fed cuts rates?

Yes, a variable-rate HELOC payment tied to prime goes down when the Fed cuts, as long as your rate is above its floor. The change shows up when your agreement says the rate adjusts, often the next billing cycle.

Rates change and your home secures a HELOC. This page is general information, not an offer to lend. To see your own numbers, get your HELOC rate from Shawn.

More in HELOC guides

• Credit score for a HELOC
• HELOC closing costs and fees
• How long a HELOC takes
• Does a HELOC require an appraisal?
• Is HELOC interest tax deductible?
• Fixed-rate HELOC options
• Can you pay off a HELOC early?
• How to refinance a HELOC

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