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maverick73

LIBOR - London InterBank Offered Rate

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LIBOR is the benchmark interest rate that banks charge each other for overnight, one-month, three-month, six-month and one-year loans. It's the benchmark for bank rates all over the world. LIBOR is an acronym for London InterBank Offered Rate. Reuters publishes it each day at 11 a.m. in five currencies. They are the Swiss franc, the euro, the pound sterling, the Japanese yen, and the U.S. dollar.  In addition to setting rates for interbank loans, LIBOR is also used to guide banks in setting rates for adjustable-rate loans, including interest-only mortgages and credit card debt. Lenders typically add a point or two to create a profit. The BBA estimated that $10 trillion in loans were affected by the LIBOR rate.

If you have an adjustable-rate loan, your rate will reset based on the LIBOR rate. As a result, if LIBOR rises, so will your monthly payments. The same will happen to your outstanding monthly credit card debt.  Even if you have a fixed-rate loan and pay off your credit cards each month, a rising LIBOR will make all types of consumer and business loans more expensive. This reduced liquidity will cut back on consumer demand, slowing economic growth. Companies that can't expand won't need to hire. As demand falls, they may even need to lay off workers. If LIBOR remains high, then it could create a recession and resultant high unemployment. 

Screen Shot 2017-06-14 at 22.57.13.png

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Good news then.

 

Interest rates rising despite the boe doing their best to manipulate them.

 

U.s. raising rates will push this higher.

 

Keep getting emails from shawbrook bank with new rates.

 

The boe cannot ignore inflation now, its starting to really hit now and I suspect many are now on the edge.

 

I'd wager on BOE rate rise before Christmas. Housing madness will end.

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Yep, rates will eventually rise through sheer market forces and it will be pandemonium trying to contain the fallout from that as nobody will be prepared.

Some way to go yet though.

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13 hours ago, TheCountOfNowhere said:

Good news then.

 

Interest rates rising despite the boe doing their best to manipulate them.

 

U.s. raising rates will push this higher.

 

Keep getting emails from shawbrook bank with new rates.

 

The boe cannot ignore inflation now, its starting to really hit now and I suspect many are now on the edge.

 

I'd wager on BOE rate rise before Christmas. Housing madness will end.

He's up shortly. The market already factored in a hike in interest rates.... uncertainty within the government, deficit goes up, leads to off loading of gilts, inflation rises as the pound falls through the floor.... then comes along the BoE too camouflage the fact that this country doesn't have enough people to spend money to generate tax revenues, business relocating...... 

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5 minutes ago, the_duke_of_hazzard said:

+1

 

1 very important point from that graph is around 2004 when prices should have collapsed...the LIBOR went through the floor before heading back up to when the crisis began.

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If this sets bank loan rates, then how can they offer sub 1% mortgages.  Is it just the fee that make money from, or do they expect lots of customers to continue on SVR?

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10 minutes ago, Just_Do_It said:

If this sets bank loan rates, then how can they offer sub 1% mortgages.  Is it just the fee that make money from, or do they expect lots of customers to continue on SVR?

loss leader perhaps now ?

stump up a 50% deposit on a 60% over priced house, supported by HTB and free money from the BoE, the bankers can't loose....someone can tho

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17 hours ago, Just_Do_It said:

If this sets bank loan rates, then how can they offer sub 1% mortgages.  Is it just the fee that make money from, or do they expect lots of customers to continue on SVR?

You've got 2 of the reasons.  Another one is Carney's Magic Money Tree the Term Funding Scheme:

Lenders will be allowed to borrow central bank reserves at close to the 0.25 per cent rate for four years

 

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On 6/14/2017 at 9:59 PM, maverick73 said:

LIBOR is the benchmark interest rate that banks charge each other for overnight, one-month, three-month, six-month and one-year loans. It's the benchmark for bank rates all over the world. LIBOR is an acronym for London InterBank Offered Rate. Reuters publishes it each day at 11 a.m. in five currencies. They are the Swiss franc, the euro, the pound sterling, the Japanese yen, and the U.S. dollar.  In addition to setting rates for interbank loans, LIBOR is also used to guide banks in setting rates for adjustable-rate loans, including interest-only mortgages and credit card debt. Lenders typically add a point or two to create a profit. The BBA estimated that $10 trillion in loans were affected by the LIBOR rate.

If you have an adjustable-rate loan, your rate will reset based on the LIBOR rate. As a result, if LIBOR rises, so will your monthly payments. The same will happen to your outstanding monthly credit card debt.  Even if you have a fixed-rate loan and pay off your credit cards each month, a rising LIBOR will make all types of consumer and business loans more expensive. This reduced liquidity will cut back on consumer demand, slowing economic growth. Companies that can't expand won't need to hire. As demand falls, they may even need to lay off workers. If LIBOR remains high, then it could create a recession and resultant high unemployment. 

Screen Shot 2017-06-14 at 22.57.13.png

unfort - these rates are USD LIBOR.  GBP LIBOR is as follows:

 

1m  0.22%

2m 0.26%

3m 0.289%

6m  0.42%

12m  0.607%

 

Even looking further out along the interest rate curve, interest rate swaps (which fix against LIBOR) are showing 5y 0.745%  & 10y 1.09%.

 

I am not saying these are right, but just shows a market and where people are putting money where their mouth is.

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On 6/14/2017 at 10:37 PM, TheCountOfNowhere said:

Good news then.

 

Interest rates rising despite the boe doing their best to manipulate them.

 

U.s. raising rates will push this higher.

 

Keep getting emails from shawbrook bank with new rates.

 

The boe cannot ignore inflation now, its starting to really hit now and I suspect many are now on the edge.

 

I'd wager on BOE rate rise before Christmas. Housing madness will end.

..earlier...before the next election....:rolleyes:

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On 16/06/2017 at 5:18 PM, South Lorne said:

..earlier...before the next election....:rolleyes:

BoE is full of doves... Two external members of the committee will be leaving shortly... So unless Mr 'Speadsheet' aka the Chancellor... looks to shake things up... We're reliant of external forces doing the evil bidding for savers ? 

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18 hours ago, maverick73 said:

BoE is full of doves... Two external members of the committee will be leaving shortly... So unless Mr 'Speadsheet' aka the Chancellor... looks to shake things up... We're reliant of external forces doing the evil bidding for savers ? 

The external force is already being applied in the form of US interest rate rises.

 

Many, on here, thought this would never happen, but it has.

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13 minutes ago, TheCountOfNowhere said:

The external force is already being applied in the form of US interest rate rises.

Not forgetting the US Fed is keen to start unwinding their four and a half trillion of quantitative easing purchases. Pressure is ramping up on the BOE to lift rates. Next months RPI/CPI will show that fraud guidance has a limited shelf life.

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3 minutes ago, Blod said:

Not forgetting the US Fed is keen to start unwinding their four and a half trillion of quantitative easing purchases. Pressure is ramping up on the BOE to lift rates. Next months RPI/CPI will show that fraud guidance has a limited shelf life.

People seem to think the UK is some  kind of a world power.

We're nothing but the US governments European "Van Weasel" 

When the US says Jump, Carney will have to say "off what cliff".

 

Edited by TheCountOfNowhere

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2 minutes ago, TheCountOfNowhere said:

People seem to think the UK is some  kind of a world power.

We're nothing but the US governments European "Van Weasel" 

When the US says Jump, Carney will have to say "off what cliff".

Currently that is being obscured by Carney and his deception is about to be shattered along with the housing market.

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8 minutes ago, TheCountOfNowhere said:

People seem to think the UK is some  kind of a world power.

We're nothing but the US governments European "Van Weasel" 

When the US says Jump, Carney will have to say "off what cliff".

 

I know, but it will be over very soon.

We will be playing only sideshow and would end up like the poor souls left.

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