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What is the libor interest rate?
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5th Nov 2009 by Burt Carlson
Libor is the London Inter Bank Offered Rate. It is the rate that banks in london's wholesale market charge each other fro unsecured loans. The index is used for a variety of purposes including interest rate swaps, floating rate notes and variable rate mortgages. This index is the most common index used in adjustable rate mortgages (Arm's). In an Arm the borrower has a fixed rate for a period of time (say five years) at the end of which the Arm adjusts based on the total of gthe index (Libor) plus a Margin (2.25% for example). The total is the borrowers new rate for the next year. This process continues until the loan is paid off.
Libor is the London Inter Bank Offered Rate. It is the rate that banks in london's wholesale market charge each other fro unsecured loans. The index is used for a variety of purposes including interest rate swaps, floating rate notes and variable rate mortgages. This index is the most common index used in adjustable rate mortgages (Arm's). In an Arm the borrower has a fixed rate for a period of time (say five years) at the end of which the Arm adjusts based on the total of gthe index (Libor) plus a Margin (2.25% for example). The total is the borrowers new rate for the next year. This process continues until the loan is paid off.
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5th Nov 2009 In Investing
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