Prime vs. Libor

Home Ownership Accelerator Intro

HOA vs Reverse Mortgage

INDEX COMPARISON
PRIME RATE vs 1-mo. LIBOR Since the 1-month LIBOR index was first published by Fannie Mae in September of 1989, it has tracked in parallel with the Prime Rate index. Below is a graph which shows both indices together, as well as some observations relevant to Home Ownership Accelerator:

We are currently nearing the averages for both indices.¹
Since 1989, 1-mo LIBOR has averaged 4.57% (Prime has averaged 7.3%).
Prime always moves in 0.25% increments.
1-mo LIBOR can move in any increment, and has moved as slowly as 0.0009%.²
1-mo LIBOR tends to decline about 9% faster and rise 10% slower than Prime.³
The gap between the indices is about 2.8%, and has gradually widened since 1989.
The gap appears to be slightly larger when rates are falling.
The interest rate caps on many Prime-based HELOCs are around 18%.

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Data as of January 10, 2006. Notes: 1.) 12/31/05 1-mo LIBOR was 4.386%, Prime was 7.25%. 2.) February 2004. 3) In approximately 78 months of overall declining rates (see color bars above), Prime declined 11.5% and 1-mo LIBOR declined 12.5%, and in approximately 71 months of overall rising rates, Prime rose 8.25% and 1-month LIBOR rose 7.87%. Past index data is not necessarily a predictor of future rates. Programs and terms subject to change without notice. Payments, draws, and variable interest rate will affect total interest and loan payoff timing. Loan balance may increase if withdrawals exceed deposits. © 2006 CMG Financial Services. “Home Ownership Accelerator” and the yellow flying house logo are trademarks of CMG Financial Services, Inc. Used by permission; 1/06. DOC lic. Under CRLA #4150025; CO 20031109756; MI, Lic #FR0989/#SR1689; MO HUD Exempt; OH, DFI #MB5018/#SM341; OR, ML Lic. #3000; TN, DFI Reg. #2275; VA, Lic #MLB-760; WA, DFI, Exxempt RCW19.146.020(3)(b).

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Loan approval is not guaranteed and is subject to verification of specific information that requested at the time of application. Specific rates may not be available for all borrowers. Rates subject to change. California Dept. of Real Estate, Broker #01421018 “Home Ownership Accelerator” and the yellow flying house logo are trademarks of CMG Financial Services, Inc Home Ownership Accelerator® is a proprietary financial product innovated and funded by CMG Mortgage Services, Inc., San Ramon, CA, for assignment and servicing by GMAC Bank®, Member FDIC, Horsham, PA. This is not a bi-weekly program usually refered to as the Mortgage Accelerator or Mortgage Excellerator.

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