Lie-BOR
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LIBOR (the acronym used for the London Inter-bank Offered Rate) is currently under close scrutiny from global financial watchdogs, including the Canadian Competition Bureau (CCB), with competition authorities from the U.S. expected to join the fray soon.
Although set in London by the British Banker’s Association (BBA), LIBOR commands significant influence over global financial markets, including those directly affecting California real estate financing. LIBOR is an interest rate set daily by the BBA, based on estimates of what it costs banks to borrow cash from one another.
In essence, LIBOR sets the benchmark for the inter-bank cost of funds and is used almost pervasively in global financial markets for setting rates on a multitude of different financial dealings. In the U.S., and in the real estate market particularly, LIBOR is the benchmark rate set for the pricing and daily fluctuations in many adjustable rate mortgages (ARMs).
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About The Author
Jeffery Marino
is an assistant editor and lead on our first tuesday news alerts, specializing in critical economic analysis and its impact on California’s real estate market.
![I-will-not-lie[1]](http://firsttuesdayjournal.com/wp-content/uploads/I-will-not-lie1-106x75.jpg)
LIBOR has always been a suspect index, especially since it could fluctuate wildly overnight. While First Tuesday holds an appropriate position regarding arms; if ARMs are to be used, more stable indexes such as MTA or COFI are far superior for the sake of a borrower.
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