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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.
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Rates, News & Advice Articles
September 8, 2010
The stock market rebounded following Tuesday’s major sell off as investors moved back into equities on Wednesday. The markets move up is a bit puzzling as there was limited economic data on Wednesday aside from a report that European debt was begging to become less problematic for the market. A...
September 3, 2010
For the second time this week, the stock market has jumped over 100 points in trading. Friday’s market surge is being driven by a better than expected report on the employment front as the non farms payroll report was released early Friday morning. While the numbers from the report show mixed signals...
September 1, 2010
The stock market got into rally mode today to start the month of September with a bang. Surging by over 200 points in heavy trading as investors rallied into equity positions. The strong rally in the DOW follows a steady decline of the DOW in the past 60 days as the “double dip” recession...
August 27, 2010
The stock market finally caught a relief rally on Friday, as the DOW jumped well over 100 points on optimism from a reassuring speech from Fed Chairman Ben Bernanke. The DOW was able to get back above the 10,000 point market as investors took advantage of lower equity prices across the board on the market....