Prime Rate vs 30 Year Mortgage...Charted For Easy Tracking

As a mortgage consultant, we try to answer that ever expected question when the Fed moves prime, "...so, how is my rate affected by the rate change in prime?", but don't always have right on hand a chart. [Please see previous post at LINK for additional details regarding this subject].

When buying Real Estate, it would be easy to conclude from the information below, although the 30 year fixed rate will also drop after the Fed drops Prime, it would be rare that you had the time to wait if you are already in a contract and Prime was dropped. The 30 year rate takes a little a while to react after Prime has been changed. In the same fashion, Prime is increased and you are under contract, you can probably stand to still float a lock for 15-30 days w/out too much concern in losing ground on your rate.

Below is a chart of the past 30 + years tracking the Prime Rate and the 30 year fixed mortgage. In case it doesn't show up too clear, the blue is Prime and the orange is the 30 year mortgage. It is tracked on September of every year starting in 1971 and ending at Sept 2008.

By saving this chart on your desktop or My Documents, you can forward this chart along with your version of the explanation when they ask, "what's up with my rate now since Fed changed Prime"?


Best of luck in your home buying goals!