Libor fixing and me

baxy

dunstonh wrote: »

How have you lost out?

By being given such a low rate of interest on our 35k

jamesd

baxy wrote: »

'The interest was calculated at 0.75% below 6month stirling LIBOR rate.' We have certainly lost out because of the LIBOR scandal so wonder if there is any way we can try to reclaim the lost interest.

You could start by trying to find some evidence that the Sterling LIBOR rate fixings were being manipulated. The current fuss is about the US Dollar and EURIBOR LIBOR fixings. After you've done that you can try to work out how much you believe the change in fixing was. The effect of say a 0.01% lower fixing on your interest rate, enough to make a significant difference when trading hundreds of billions of Dollars, £10,000 per billion, is much less significant for £35,000, when that percentage change is £3.50 if it was maintained consistently lower by that amount over a year. It's unlikely that the fixings were adjusted by as much as 0.01% or that it was maintained continuously for a year.

jamesd

baxy wrote: »

By being given such a low rate of interest on our 35k

The reason for the major drop in interest rate was the Bank of England reducing its Bank Rate for overnight money to 0.5%. Even if it turns out that the Sterling LIBOR fixings were being manipulated the largest effect by far is still that big drop in Bank Rate.

baxy

jamesd wrote: »

The reason for the major drop in interest rate was the Bank of England reducing its Bank Rate for overnight money to 0.5%. Even if it turns out that the Sterling LIBOR fixings were being manipulated the largest effect by far is still that big drip in Bank Rate.

Hi
Dont really understand the Libor rate but did think 14.91 was a very poor 6 month return on 35k. These loan notes are locked in till next May unless we want to release them and pay tax and NI so guess we just have to make do.

jamesd

Just £14.91 over six whole months on £35,000 is just 0.0852%. So a very poor deal for you. If you were getting the BoE Bank Rate of 0.5% it would be £87.50 over the same period. Still not great. The 2008 six month value of £923.65 was 5.278%. That looks consistent with the LIBOR rate at tthe time.

On 7-8-2012 the 6 month Sterling LIBOR rate was 0.95313% and there's more history there if it interests you. The pictures show how the rate plummeted in 2009.

In your case the manipulation just isn't a big deal. It's the big drop due to the actions of the Bank of England lowering Bank Rate and then fiscal easing which has hurt.