Many financial analysts speculated that the government would slash the Federal Funds Rate earlier today. But, Federal Reserve chairman Ben Bernanke and his colleagues voted unanimously to keep rates the same (2.0%).

A federal rate cut would have resulted in lower interest rates on most home equity lines of credit. Almost all U.S.-based HELOC rates are tied to the Prime Rate which, in turn, is pegged to the Federal Funds Rate. Generally, the Prime Rate is 3 percentage points above the Federal Funds Rate.

Current HELOC borrowers would have loved the extra relief. However, the Prime Rate is already at a relatively low 5%. Compare that to 20.35% in December of 1980 and 8.03% in September of last year.

For a more thorough explanation of HELOC rates and indexes see: Will Federal Rate Cuts Affect Your HELOC APR?

You may also be interested in the Federal Reserve’s list of historic Prime Rates.

Tags | Ben Bernanke, federal funds rate, Federal Reserve, Heloc, home equity line of credit, mortgage crisis, prime rate