Okay, so you've seen me use this sort of graphic before. 

Published by the Federal Reserve Bank of Cleveland, this Fed Funds Rate Future chart is an analysis of what action market players think the Fed will take at its next meeting.  The Fed next meeting is a two-day affair beginning October 30.

The Fed Funds Rate matters to regular people like you and me because it is used to calculate Prime Rate, the rate on which credit card interest rates and Home Equity Lines of Credit rates are based. 

Prime Rate had been 8.250% from June 2006 until September 2007's Fed meeting after which the rate dropped to 7.750%.

According to the chart above, prior to the Fed's September meeting, traders placed an 80 percent expectation that the Fed Funds Rate would be lower in October that it is right now.  The odds of the FFR being 4.500% points were roughly 60 percent (as represented by the blue line) and the odds of it being 4.250% were roughly 20 percent (as represented by the white line).

Today, the probabilities look much different. 

• 25 percent chance that the Fed Funds Rate will drop 25 basis points to 4.500%
• 5 percent chance that the Fed Funds Rate will drop by 50 basis points to 4.250%
• 70 percent chance the Fed Funds Rate will remain at 4.750%

We track this chart because can help borrowers make decisions about whether a Home Equity Line of Credit is preferable to a Home Equity Loan.  HELOCs are adjustable rate loans based on Prime Rate; HELOANs are fixed rate loans.  If the probability that Prime Rate will fall is very high, a HELOC becomes more attractive to a borrower.

All things equal, HELOANs tend to be priced 0.250-0.500% lower than HELOCs but carry higher payments.  HELOANs amortize whereas HELOCs only require interest payments each month.

There is currently a 0% chance that the Fed will choose to raise the Fed Funds Rate.  This means that is highly likely that Prime Rate will remain at 7.750% through at least December 11, the date of the Fed's next meeting.

Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.