Prime is based on the fed govt, they set it to try to help the flow of the economy
Libor is set by a group of English banks, as far as I can see, it's to help control the pound.
That being said, Libor flucuates a lot more (but in small increments) then prime, it basically changes from month to month (but traditionally doesn't deviate from prime such as libor is high, prime is low), prime on the other hand, is more stagnant, it's been at 4.00 for the past couple years, but there's talk of it getting moved up this summer with the assumed upswing in the economy. Either one is a gamble, noone knows where the economy is going. It would be better probably to get a 6% fixed then a 4-4.5% with variables, unfortunatley ir seems like NO lenders are offering fixed right now, probably because of the expected upswing. That being said, I'm doing citi who bases theirs on prime since I'm more in touch with the US market then the English market, instead of access group (that and they offered me no origination fee unlike access). It won't be that big of a deal with which you go to, they're both variables, and no matter how much you research the markets to see which has the best shot at going down, of course noone can predict it. Your best bet, is to get the lowest rate, and then when the economy is right and lendors are offering good fixed rates, consolidate into it immediatley!
Either way you're gambling.