Libor

daylad

hi, my mortgate is calculated on the libor rate, is it likely to go up massively after this barclays fraud thing? thanks

Gary123456790

Hi,

I doubt your mortgage is directly linked to Libor - maybe the bank of England base rate?

And No it isnt going to shoot up because of this!

Gary.

daylad

hi, my fixed rate ended and it now follows libor rate, but thanks

brit1234

daylad wrote: »

hi, my mortgate is calculated on the libor rate, is it likely to go up massively after this barclays fraud thing? thanks

It looks like Barclays was not the only bank to do this, it was just the first to admit. As more comes out and the system is more transparent then yes I believe the LIBOR rate will continue to rise. It has been rising anyway despite the manipulation and will get higher with the Euro crisis continuing.

Just have a look at the figures on the link below and that is with the massive Euro bailout.

http://www.bankrate.com/rates/interest-rates/libor.aspx

Thrugelmir

daylad wrote: »

hi, my mortgate is calculated on the libor rate, is it likely to go up massively after this barclays fraud thing? thanks

Simple answer is no. Longer term LIBOR may well rise as BOE base does.

May hay while the sun shines. No point in worrying about something over which you have no control.

froggeroz

brit1234 wrote: »

It looks like Barclays was not the only bank to do this, it was just the first to admit. As more comes out and the system is more transparent then yes I believe the LIBOR rate will continue to rise. It has been rising anyway despite the manipulation and will get higher with the Euro crisis continuing.

Just have a look at the figures on the link below and that is with the massive Euro bailout.

http://www.bankrate.com/rates/interest-rates/libor.aspx

Could you tell me where you get your facts from. The libor rate has not been rising recently. In fact in jan was 1.08406 feb 1.80175 march 1.05525 April 1.02563 may 1.01250 June 0.99063 and July 0.88875 which to me shows it falling? And yes approximately 250,000 mortgages in the uk are directly linked to the libor rate. I'm one of those 250,000.
Kate

brit1234

froggeroz wrote: »

Could you tell me where you get your facts from. The libor rate has not been rising recently. In fact in jan was 1.08406 feb 1.80175 march 1.05525 April 1.02563 may 1.01250 June 0.99063 and July 0.88875 which to me shows it falling? And yes approximately 250,000 mortgages in the uk are directly linked to the libor rate. I'm one of those 250,000.
Kate

Why is it important?
The sterling three-month LIBOR rate influences the level at which lenders set some rates on loans, especially mortgages, to consumers and to businesses. It also impacts on the amount they will lend. It is the rate at which banks lend to each other and is therefore a measure of how much they trust each other and a measure of the credit crunch. There tends to be a lag from when LIBOR changes to when bank lending rates are altered.
Also, some new mortgage deals have been linked to LIBOR rather than bank rate or a lender's SVR. That's because it is more closely linked to a lenders' costs.

Read more: http://www.thisismoney.co.uk/money/markets/article-1645325/LIBOR-Latest-inter-bank-lending-rate-charts.html#ixzz1zXCPx2oP

3 Month LIBOR Rate
This week 0.46
Last week 0.47
Last year 0.25
http://www.bankrate.com/rates/interest-rates/libor.aspx

Now all the British QE, announcements of further QE and European Bank bailouts have pushed LIBOR down in the last month. However it has almost doubled in the last year and when the first EU country defaults (only a matter of time) it will go far higher.

Traditionally banks use to borrow from savers to lend however recently they have been borrowing on the international markets as there are not enough savings. The near doubling of LIBOR led to SVR rates rising as they had to recoup the higher borrowing costs.

It does not just affect those 250k directly linked mortgages but pretty much all lending. Hence a move away from traditional BOE rate mortgages and a move to more LIBOR influenced mortgages as it reflects better the cost of borrowing.

froggeroz I think what you are quoting is the 1 week LIBOR rate not the 3 month one (main index). Yes you are right to say that the 1 week rate has come down, again due to mass bailouts and QE. However the typical time banks borrow is 3 months not 1 week so the 3 month LIBOR rate is more important/relevant one.

froggeroz

brit1234 wrote: »

3 Month LIBOR Rate
This week 0.46
Last week 0.47
Last year 0.25
http://www.bankrate.com/rates/interest-rates/libor.aspx

Now all the British QE, announcements of further QE and European Bank bailouts have pushed LIBOR down in the last month. However it has almost doubled in the last year and when the first EU country defaults (only a matter of time) it will go far higher.

Traditionally banks use to borrow from savers to lend however recently they have been borrowing on the international markets as there are not enough savings. The near doubling of LIBOR led to SVR rates rising as they had to recoup the higher borrowing costs.

It does not just affect those 250k directly linked mortgages but pretty much all lending. Hence a move away from traditional BOE rate mortgages and a move to more LIBOR influenced mortgages as it reflects better the cost of borrowing.

froggeroz I think what you are quoting is the 1 week LIBOR rate not the 3 month one (main index). Yes you are right to say that the 1 week rate has come down, again due to mass bailouts and QE. However the typical time banks borrow is 3 months not 1 week so the 3 month LIBOR rate is more important/relevant one.

The one your using is the USD libor interest rate 3m. Not the sterling one. The 3m sterling
http://www.global-rates.com/interest-rates/libor/british-pound-sterling/gbp-libor-interest-rate-3-months.aspx

consideration

I totally agree with froggeroz, it is the libor sterling that we are concerned with here in the UK.

There are reports suggesting that there is nothing for mortgage holders in the UK to concern themselves with in regard to the rigging of the libor rate by Barclays and others.

There are reports that say, it is not yet confirmed the sterling libor was affected.

This is no doubt in an effort to detract every single mortgage holder seeking to make a claim - which makes sense, because a lot of mortgages are not subject to the 3 month sterling libor rate.

They are either tracking the BoE rate or in some instances the Barclays Bank Base Rate (BBBR) (which generally follows the BoE Rate).

Non the less, very little has been said about the BBBR in relation to Mr Diamond's public admittance that the conduct of traders and submitters was reprehensible.

In essence we have yet to truly understand what effect the BBBR has on consumer mortgages in this instant?

The order of the FSA (UK authority) and the order of the CFTC (USA authority) both confirm that rigging occured from 2005 to at least 2009 - I failed to see within the published FSA order any mention of 'sterling libor' but the CFTC order definately does.

EXTRACT:

"Some commentators argue that, since the FSA found only evidence of attempts to distort US dollar Libor and the European Euribor rate – not sterling Libor, which is used to price certain UK buy-to-let, private bank and subprime mortgages – the chances of lawsuits by homeowners are limited. However, Britons with holiday homes are at greater risk of having had mortgage rates set artificially.

However, if it can be proved that sterling Libor was also rigged, the 250,000 UK homeowners with Libor linked mortgages stand a greater chance of successfully suing their bank, especially if they can prove they took out their loans on days when Libor rates were artificially inflated, implying their mortgage was set at too high a rate. People with subprime first and second-charge mortgages whose interest rates rise and fall with Libor and "cost of funding" may also qualify for compensation. Alexander added:

"The full ramifications of this are not yet understood and a lot of lawyers are going to be working over the next few weeks to get to the bottom of how it’s effected their clients’ relations with the bank."

Annisele

It sounds as though Barclays was mainly trying to manipulate the LIBOR rate downwards - to make it look as though other lenders thought Barclays was a better credit risk than it actually was.

If that's the case, then people with mortgages linked to LIBOR may actually have benefitted from the shenanigans.

rayhool

I have a mortgage that is linked to the US libor rate, I'm following this story with interest.