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Swap Rates and Fixed Rate mortgages
Graeme7777
Posts: 255 Forumite
Hi,
What is the connection between "swap rates" and the interest rates on fixed rate mortgages?
Are these "interest rate swaps"?
Thanks!
What is the connection between "swap rates" and the interest rates on fixed rate mortgages?
Are these "interest rate swaps"?
Thanks!
0
Comments
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'Swap' rates are rates which the banks lend to each other. So, it stands to reason that if the bank has to pay more to borrow the money it lends to you that it needs to lend to you at a correspondingly higher rate.
The most common interbank rate for all of this would be the 3 month LIBOR (London InterBank Offered Rate).
Okay, I've oversimplified that - but that's the general gist.Titch
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