 |
LIBORLIBOR – London Inter Bank Offered Rate, is a common rate that banks and lenders use to calculate the rate they offer on mortgage loans, auto loans, personal and commercial loans. The LIBOR has become a popular benchmark for international lending as it is a reflection of between eight and twelve lending institutions. The rate that is offered is the mean rate (average) of the pooled lenders and is published daily. LIBOR rates are published to reflect lending periods as short as overnight, and adjust up to one month, three months, six months and one year. Most adjustable rate mortgage loans that lenders offer in the United States are based on the six month libor. The LIBOR is similar to the U.S. Federal Funds rate only in that it is very influencial in determing the end rates on loan programs and lending between banks. The major difference is the U.S. Fed Funds and Fed Discount rate are set specifically by the Federal Reserver (FOMC) in the U.S. as a part of their monetary policy. Lenders and Banks have gravitated towards using the LIBOR versus the Fed Discount rate because the LIBOR is not directly influenced by political pressures and is believed to be a more accurate reflection of the world market. The LIBOR is also believed to be a more stable measure to lend money and less influenced by one countries economic policies.
|
Rates, News & Advice Articles
June 13, 2011
The stock market tried to mount a rally on Monday, but finished the day relatively flat, a growing signal that the pessimism in the market may be around to stay for the summer. The DOW was up almost 100 points in early trading action as investors were looking to buy into some bargains from the sell...
QRM Yet Another Federal Blunder In Fixing The Housing Market
QRM – Qualified Residential Mortgages is probably the dumbest idea the government has rolled out in the past 24 hours. An idea whose origination stems from the colossal collapse of the economy and U.S. housing markets would ensure the collapse of the American Real Estate Market. The simple economics...
June 4, 2011
The continued decline in stock prices, weakness in housing and the employment markets over the past sixty days has very few silver linings. The one area that has benefitted from the market changes is the mortgage market, where fixed home mortgage rates have continued to improve. Loan rates dropped to...
May 26, 2011
May has been a great month for the mortgage market as long term interest rates have moves substantially lower this month following a dip in bond yields. The ten year treasury bond move below 3.1 this week, over seventy basis points off of its high levels of the year. The correlation to fixed mortgage...