LIBOR rates up sharply ?

mystic_trev

Can't find any information on this - but heard they jumped nearly half a percent today!

Has anyone got a link?

Debt_Free_Chick

Here you go

Bf109

Debt_Free_Chick wrote: »

Here you go

Sorry to be dense by !!!!!! is that all about?

Debt_Free_Chick

Bf109 wrote: »

Sorry to be dense by !!!!!! is that all about?

Click on today's date and the pop-up shows you today's LIBOR together with the change over one day, one week, month to date and the rate one, three, six and twelve months ago.

Oh - and it shows you LIBOR in Dollars, Sterling, Euro, Yen etc etc etc

TMI?

Bf109

Debt_Free_Chick wrote: »

Click on today's date and the pop-up shows you today's LIBOR together with the change over one day, one week, month to date and the change over one, three six and twelve months.

Oh - and it shows you LIBOR in Dollars, Sterling, Euro, Yen etc etc etc

TMI?

lynzpower

can someone enlighten me, im confused again

If the libor is up ( which is only to be expected under the circumstances today) but the gov/ BOE put interest rates down, to the lay person in the street potentially looking to buy somewhere what is the potential outcome for mortgage availability ( lets saty for arguments sake borrower has 25% dep)

Paul_N_4

LIBOR has gone from around 5.05% (where it had stabilized for the last couple of months), up to 5.5% today. Back to where it was around March.

Debt_Free_Chick

lynzpower wrote: »

can someone enlighten me, im confused again

If the libor is up ( which is only to be expected under the circumstances today) but the gov/ BOE put interest rates down, to the lay person in the street potentially looking to buy somewhere what is the potential outcome for mortgage availability ( lets saty for arguments sake borrower has 25% dep)

Depends. Possibly no impact on mortgage availability if the lender isn't backing its mortgaging by borrowing from other banks. This was the NR problem - it borrowed to lend. Other lenders don't - they lend from deposits or reserves.

And ... there's been "an odd spread" between LIBOR and BoE base rate/mortgage rates for some time. Remember that the base rate is set by the BoE and LIBOR is set by a panel of banks/the BBA.

LIBOR mortgage spread

into Google for some articles on this.

HTH

lynzpower

very helpful thanks DFC :A

Generali

LIBOR, an explanation:

LIBOR (the London InterBank Offer Rate) is the average of the rates of interest banks have charged each other to lend money over the course of a day for various periods of time. Overnight sterling LIBOR for example is the average rate of interest of all the loans made between banks today repayable tomorrow.

These cash shortfalls are a completely normal part of banking and nothing to be worried about. The problem basically comes from the way that money is spent in unpredictable amounts to a certain extent and it's quickest and cheapest for the bank with an overnight excess to lend it to one with a defecit. The boot will be on the other foot in a few days time.

Normally, LIBOR is slightly higher than the base rate, by perhaps 0.2% (aka 20 basis points). This is because the base rate is the rate at which the Bank of England will do you an overnight repo. That is where a bank gives the BoE some Government bonds as collateral against borrowing some cash. The idea is if the bank goes bust the BoE can sell the bonds and still get its money back. The reason LIBOR is a little higher than the base rate is that the interbank money markets in which LIBOR is measured use unsecured loans rather than secured so a little is added on for the risk of the borrowing bank going bust.

In normal times this little bit added on (the risk premium) is small as banks in London don't go bust. The chance of one bank lending to another losing the money is so vanishingly small it's only worth charging a tiny risk premium on it. The trouble is, banks are going bust now with alarming regularity so lending banks need a bigger risk premium built in to allow them to make enough profit that if another bank does go bust they'll have made enough extra profit to make up for the loss (or at least that's the theory).

As LIBOR is a reflection of the rate of interest your bank is going to pay to borrow money, it's a helpful rate for them to use to set interest rates when they lend money.

LIBOR is calculated by the British Bankers Association. They take the results that a panel of 8 banks report as being the rates of interest offered for interbank loans in the marketplace. The BBA then discards the top and bottom 25% of interest rates and calculates an average of the 50% of trades that remain. This is done at 11am each day for 10 different currencies and is called the Spot Fix. I have no idea why it's called that.

mewbie_2

!!!!!! Generali, I've just done the scroll button on my Blackberry trying to read all that.