Financial websites and publications, such as HSH.com, The Wall Street Journal and Bankrate.com, publish index rates. Lenders use index rates mainly in personal financial products, but they sometimes factor into corporate transactions as well, says Bankrate.Continue Reading
The Federal Funds Rate, London Interbank Offered Rate, 12-Month Treasury Average and Constant Maturity Treasury Rate are examples of index rates, according to HSH.com. Lenders use them to calculate interest rates for variable-rate financial products including mortgages and other loans.
Lenders adjust the interest rates of their products based on current economic conditions reflected in index rates, states Investopedia. Banks' rates typically included a fixed percentage, referred to as a margin, in addition to an index rate. In some cases, customers choose an index or negotiate the margin when taking out a loan.Learn more about Investing