If a bank can set interest rates below the prime rate or do they make it prime?

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The base rate on a mortgage loan in the banks in my area is about 6.1%. Then the banks set interest rates, lower than the prime rate or are they the prime rate. If so, is there another source, I can also (eg credit unions, mortgage companies, etc.) are to obtain a lower rate. I need a way to compare interest rates in my area. I’m going down below 5%.

4 Comments
  1. Reply
    JOHN A
    May 1, 2011 at 12:46 am

    yes banks can and will often set prime rates lower to lure potential customers in secondly, depends on what your credit score is why they would set the interest below prime for example if you have a 800 credit score they will treat you like a preferred customer.

  2. Reply
    MadMan
    May 1, 2011 at 12:52 am

    Banks can set the interest rate on a mortgage at whatever they want to but Prime is the benchmark for good credit customers. You have not given any details but it is unlikely that you will get a mortgage below 5%.

  3. Reply
    Steve D
    May 1, 2011 at 1:01 am

    Banks can set them anywhere they want. The problem is that muc below prime, they lose money (why would they loan to you at 5% when they can get 6% from their best customers). Right now, you will be hard pressed to find any mortgage near what you are looking for

    As of today, the best rate was on a 15-year fixed mortgage with an average rate of 5.83%…I just checked rates at Bankrate.com for a 15-year fixed in rural Maryland for $ 300,000 with no points and got a quote for 5.75 lowest.

    If you want to pay points, you can get it lowered.

  4. Reply
    I Buy And Sell Houses
    May 1, 2011 at 1:50 am

    Sure. Banks can charge whatever interest they want. Similarly, they can pay whatever interest they want.

    And, actually, mortgage rates aren’t directly tied to the prime anyway.

    Having said that, a mortgage rate of 6.1% in today’s market is actually quite good. You’re highly unlikely to find one below 5%. Unless it’s some sort of teaser rate or some sort of ARM (adjustable rate mortgage). But that was one of the contributing factors to the sub-prime meltdown. So they’re more difficult to find today. And if your finances are so thin that you need one below 5%, then maybe you should rethink your purchasing plans, or at least the amount you can pay for a property.

    Go see a good mortgage broker. He/she will tell you what you can qualify for, and what the rates for your situation are.

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