Bill Meyers, Mortgage Loan Consultant                                                                Phone 239-566-8484 or email   bill@marcoislandmortgage.com

Marco Island FL 34145
    
              
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The 1 YEAR LIBOR Index
Many types of adjustable rate mortgage loans are indexed to the London Interbank Offering Rate.  Below is a chart of LIBOR rates for the last 10 years.  LIBOR loans normally have lower margin rates than CMT (constant maturity of U.S. treasuries) with 2.25% being typical for a residential first mortgage.  Both LIBOR and CMT are faster moving the 12 MTA index.   LIBOR seems to move faster than CMT but retains its appeal with a lower margin than the CMT indexed loans.  12-MTA Index indexed loans and COFI Indexed loans may have different margin offerings depending on market conditions and competitiveness of the lender while LIBOR and CMT lenders tend to keep their margins constant.

If you are considering a mortgage loan that adjusts to the LIBOR index, the most important factor (other than the rate and points) is the margin.  Most US commercial mortgages that use the LIBOR index offer a 4% margin.  The margin is the amount that is added to the index to adjust the rate.  All future interest rate adjustments will be determined by adding the margin to the index.

Historical rates                                                                      
 

1- Year LIBOR Index   The London Interbank Offering Rate (LIBOR) is the average of interbank offered rates for the one year U.S. dollar denominated deposits in the London market. Although the index is published monthly, this chart shows historical monthly averages.
  1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005  

2006

 

 2007 2008
January 7.75% 5.45% 5.79% 6.08% 5.21% 6.51% 6.00% 2.45% 1.45% 1.46% 3.10% 4.81%

5.33%

 3.51%
February 7.25% 5.20% 5.95% 5.77% 5.11% 6.66% 5.28% 2.42% 1.48% 1.46% 3.26% 4.94% 5.43% 2.81%
March 6.75% 5.27% 5.95% 5.83% 5.41% 6.76% 4.93% 2.50% 1.37% 1.37% 3.53% 5.15% 5.24% 2.51%
April 6.75% 5.70% 6.28% 5.91% 5.31% 6.97% 4.67% 3.01% 1.34% 1.34% 3.85% 5.29% 5.22% 2.82%
May 6.56% 5.83% 6.45% 6.02% 5.30% 6.96% 4.33% 2.61% 1.36% 1.83% 3.69%

5.33%

 5.29% 3.03%
June 6.05% 5.98% 6.29% 5.93% 5.50% 7.45% 4.26% 2.63% 1.22% 2.06% 3.78%

5.43%

 5.39% 3.41%
July 5.77% 6.17% 6.14% 5.94% 5.80% 7.21% 4.06% 2.25% 1.20% 2.46% 3.88% 5.69% 5.40% 3.29%
August 5.88% 6.24% 5.98% 5.90% 5.84% 7.05% 3.84% 2.07% 1.28% 2.43% 4.16% 5.54% 5.16% 3.24%
September 5.95% 6.06% 6.08% 5.65% 6.02% 6.98% 3.60% 1.94% 1.47% 2.30% 4.24% 5.41% 5.07% 3.34%
October 5.97% 5.99% 6.01% 5.19% 6.05% 6.81% 2.65% 1.81% 1.29% 2.48% 4.44% 5.29% 4.88% 3.82%
November 5.88% 5.72% 5.92% 4.87% 6.31% 6.73% 2.31% 1.66% 1.46% 2.55% 4.30% 5.34% 4.53%  
December 5.67% 5.70% 6.11% 5.24% 6.26% 6.62% 2.49% 1.71% 1.49% 2.98% 4.39% 5.24% 4.43%  
Averages 6.35% 5.78% 6.08% 5.70% 5.68% 6.89% 4.03% 2.26% 1.37% 2.06% 3.89%

5.31%     

4.70%  
                             

 

 

 

 

 

 

 

 

  

 

More about LIBOR

LIBOR refers to the London Interbank Offered Rate and is defined as the rate that banks pay to borrow funds from one another in the London Interbank market.  This rate is considered a benchmark rate for short term interest rates and is used by financial entities around the world.   

LIBOR is compiled by the British Bankers' Association or BBA, in London UK in cooperation with Reuters.  The BBA is an association of 223 UK banks and other financial companies in 60 different countries.  Rates are released daily after 11:00 AM London Time.

Although this website is primarily concerned with US mortgage interest rates, the various LIBOR indices are used as benchmarks by the NYSE Euronext Group’s Liffe futures and options, Germany’s securities market Deutsche Term Börse, The Tokyo International Financial Futures Exchange along with Over the Counter and lending transactions worldwide.

Incoming information for the index is evaluated by eliminating the high 25% and the low 25% quotes and averaging the middle 50% to come up with an average for the “spot fixing”.  Quotes used for the index are published to insure credibility.

BBA LIBOR fixings are provided in ten currencies:

Pound Sterling GBP

US Dollar USD

Japanese Yen JPY

Swiss Franc CHF

Canadian Dollar CAD

Australian Dollar AUD

Euro (** see note) EUR

Danish Kroner DKK

Swedish Krona SEK

New Zealand Dollar NZD

LIBOR’s appeal stems from its honest transparency and that participating banks have the highest credit ratings and are the most active in the cash markets.  About 30% of foreign exchange transactions and 20% of international bank lending flows through offices of banks in London.  London has representation from close to 500 banks, and many other major financial institutions actively trade the euromarkets  in London.   

Eurodollar rates (US dollar borrowing) are very much affected by the Fed Funds rates.

 

 

 

 “LIBOR Index” means the rate for deposits in United States dollars for maturities of six months which appears on Telerate Page 3750 as of the relevant date and time of determination. Telerate Page 3750 means the display page so designated on the Telerate Service (or such other page as may replace that page on such service, or such other service as may be nominated as the information vendor for the purpose of displaying the British Bankers Association fixing of the London Interbank Offered Rate.

 

 

 


Questions?  Call Bill Meyers at 239-566-8484 or e-mail bill@marcoislandmortgage.com


Rates vary with geographic location, lender, transaction type, credit scores and other factors
APR is abbreviation for annual percentage rate
Rates change frequently and these rates may not reflect the latest market conditions
Expressed interest rate may change or be unavailable at commitment or closing
Most rates based on primary residence, purchase transaction
Cash out refinance rates may be slightly higher
Some loans may have pre-payment penalties
Rates on some programs may require higher down payments
This is only a brief summary of rates and programs and possible fees, call for additional information on underwriting requirements
and program limitations.  Guidelines and rates posted here are general in nature and subject to change without notice. 
Rates must be locked by phone or in person.
Mortgage calculators are believed to be accurate but results are not guaranteed
All information published on this web site is believed to be accurate but cannot be guaranteed, errors may occur
This site has been built and is maintained by Bill Meyers

Bill Meyers has been employed as a  mortgage loan consultant for some of the nation's largest lenders.  Bill is not a mortgage broker.  This is Bill's personal web site and not the official web site of  any bank or mortgage company.  Please consider all information posted on this site to be general in nature and representative of mortgage rates and policies that may be available from various sources.  Bill is located in Goodland Florida.  Bill can be reached on his cell phone at (239)566-8484


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