LIBOR fixing

Sooetie

In the light of the PPI issue maybe people who had a mortgage linked to the LIBOR rate should receive compensation

ACG

Libor was fixed to get it down as far as im aware.
If you have savings linked to Libor then you might have an argument, but a mortgage i doubt.

GMS

If you enter into a fight for compensation due to the manipulation of Libor rates then be prepared for the possibility of a bill if it is shown that rates were manipulated down.

Seems fair don't you think? The wronged party is rightly compensated?

Thrugelmir

GMS wrote: »

If you enter into a fight for compensation due to the manipulation of Libor rates then be prepared for the possibility of a bill if it is shown that rates were manipulated down.

Rates were influenced both up and down Depending on the underlying trades that were being hedged.

So on what basis would compensation be awarded?

Knightsoflabor

In America on the 1st day of each month (when most mortgage rates are reset) the traders manipulated the rates upwards by up to 7.5 points above the monthly average for 9 years.

This needs to be investigated in the UK.

I am not a financial advisor, nor do I sell mortgages, but I can smell a rat!

GMS

Thrugelmir wrote: »

Rates were influenced both up and down Depending on the underlying trades that were being hedged.

So on what basis would compensation be awarded?

Compensation can put you back in the position you would have been had the incident not occured. As a result if it is proven the rate had been manipulated down then there would be a claim from the lender. Opposite if they were up.

Obviously this would need to be considered over a period of time.

The point I was making is if people want to claim wrong doing then be preapared for a counter from the lender who will claim no involvement.

Thrugelmir

GMS wrote: »

The point I was making is if people want to claim wrong doing then be preapared for a counter from the lender who will claim no involvement.

Only major banks set LIBOR. So limits potential for claims.

Miss_Havisham

Knightsoflabor wrote: »

In America on the 1st day of each month (when most mortgage rates are reset) the traders manipulated the rates upwards by up to 7.5 points above the monthly average for 9 years.

This needs to be investigated in the UK.

I am not a financial advisor, nor do I sell mortgages, but I can smell a rat!

I didn't realise that US banks based in the US were involved in the calculation of LIBOR, which is a London based rate.

Thrugelmir

Miss_Havisham wrote: »

I didn't realise that US banks based in the US were involved in the calculation of LIBOR, which is a London based rate.

and German banks.

holly_hobby

Its essentially the rate at which banks lend to each other - hence the term (London) Inter Bank Offered Rate, and is therefore the underlying rate upon which onward lending was effectively set by the institutions.

A UK LIBOR mortgage product is/was based on the average rate of a defined basket of UK banks.

LIBOR actually relates to the cost of borrowing between banks, and was in the recently exposed scandal, being artifically manipulated downwards (than it would otherwise have been had the exercises conducted by the banks involved not taken place) - in a move to increase conficence in the market and effectively each others credit worthiness ie profitability.

Therefore, it stands to reason that a LIBOR based UK mortgage holder have actually financially gained (re lower interest accumulation), rather than been financially penalised as a result of the manipulation - so having no financial loss would have no need to be compensated as a result of the issues to hand. The banks themselves and compo, well they all claim no knowledge at the top for this, and ultimately its true they will have lost money as a result of the actions of those alleged rogue traders, whom are to face the full force of the law (apparently !).

As far as I am aware, there aren't any DIRECTLY linked LIBOR savings accounts, given as I say that the rate is actually used to set the cost of borrowing not interest on deposit. (albeit the interest on deposit and general loan rates will take account and consider the money markets themselves, inc LIBOR and EURIOBOR rates (where relevant) and asset returns of course).

Its a messy old business !

Hope this helps

Holly

kingstreet

AFAIK all UK mortgages which were LIBOR linked were linked to three month LIBOR too.