What is LIBOR
Wiki: The London Interbank Offered Rate is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale money market. Most variable mortgages and short term loans are based on this rate. If it goes up your ARM follows.
What it means to you
The LIBOR rates have almost doubled recently, reflecting the fact that banks perceived so much risk. They didnt know whether the bank they loaned to would be there next week, so rates shot up fast. Now we are watching some encouraging trends, bare beginnings but still positive.
Key short-term lending rates fell again Tuesday. Libor, for three-month dollar-denominated loans fell to 4.63% from 4.72% while one-month rate declined to 4.46% from 4.56%. it has to mean that banks are begining to see a little less risk and that is th efirst step towards loosening credit.
More Good News
California: Notices of default filings, the first step of a foreclosure process -- fell 61.8 percent in September compared to August and fell 36.4 percent compared to the same month last year, reports data company ForeclosureRadar.com.( via MarketWatch)
The Feds Plan begins to Kick In
- Oct 27th - The fed's commercial paper facility will begin.
- Nov - The TARP program will begin buying toxic mortgage backed securities. The banks have already received 250 billion in fresh capital and after the TARP auctions, bank balance sheets will begin to look a lot better.
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