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What is Libor rate?

 

What is Libor rate?

The Bankrate.com financial term of the day is: "Libor rate."

Libor is spelled L-i-b-o-r, and it stands for "London Interbank Offered Rate." It's the interest that big banks charge when they lend each other money in London. Rate information is collected from a panel of 16 banks, and the results are used to set a benchmark that then determines the cost of various variable-rate loans, including credit cards and adjustable-rate mortgages. The system isn't foolproof, as demonstrated by a rate-setting scandal at Barclays. That bank may have put the lie in Libor by allegedly fudging on the rates it submitted for several years to try to boost its investment banking profits.

Your mortgage in Anytown, USA, has a London connection if its interest rate adjusts based on the Libor rate.

To find the best mortgage rates, visit the rate tables at Bankrate.com.

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Mortgage Overnight Averages
Product Rate +/- Last week
30 yr fixed mtg
3.77% 3.60%
15 yr fixed mtg
2.88% 2.74%
5/1 ARM
2.66% 2.54%
30 yr fixed mtg refi
3.76% 3.58%
View rates in your area:
 

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