Federal Funds vs. Prime Rate & Mortgage rates (graph)
Click here to see a graph of Fed Funds rates.
Does the Federal Funds rate affect mortgage rates? Click here to find out.
As you can see here, the Federal Funds rate and the Prime Rate track along with each other very closely.
Short- and mid-term ARMs, such as the 5/1 ARM shown above, are also affected by trends in short-term interest rates. As a lenders' cost of obtaining funds to lend changes, some of those reductions or increases are passed to borrowers in the form of lower (or higher) starting rates.
Long-term rates, such as 30-year fixed-rate mortgages, pay little attention to short-term rates, responding instead to economic growth and inflation pressures. They more closely follow other long-term rates, such as the yield of the ten-year Treasury Constant Maturity.
More help from HSH.com
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10 metros where a home costs about $1,000/monthHSH.com identifies 10 metro areas where you can afford the principal, interest, taxes and insurance payments on a median-priced home for only around $1,000 per month.
Home buyer programs by state
HSH.com on the latest move by the Federal ReserveThe Federal Reserve concluded a meeting today, maintaining the target range for the federal funds rate at 1.75 to 2.00 percent.