Monthly LIBOR Indexes Continue to Fall

Every category of the London Inter-Bank Offered Rate (LIBOR) index trended downward for the month of September.

Click “read more” to view a historical breakdown of the various LIBOR indices over the past 12 months.

Sources: Wall Street Journal, British Bankers’ Association 

The LIBOR, or “London Inter-Bank Offered Rate,” is based on rates that contributor banks in London offer each other for inter-bank deposits.

From a bank’s perspective, deposits are simply funds that are loaned to them.

So, LIBOR is basically a rate at which a fellow London bank can borrow money from other banks.

The original LIBOR is published by the British Bankers Association (BBA) shortly after 11:00 each day, London time, and is a filtered average of inter-bank deposit rates offered by designated contributor banks, for maturities ranging from overnight to one year.

The shorter rates, i.e. up to 6 months, are usually quite reliable and tend to precisely reflect market conditions at measurement time. The actual rate at which banks will lend to one another will, however, continue to vary throughout the day.

Rate calculations are complex as they incorporate numerous variables such as time, maturity and currency rates.

Besides the U.S. dollar and the Pound Sterling, other currencies which use the LIBOR as a significant reference rate also include the Swiss Franc, the Yen, the Canadian dollar and the Danish Krone.

Phil Ganz (354 Posts)

Philip D. Ganz is a Boston Mortgage Broker and Boston Home Loan specialist. For information, expertise, consulting, or advice about home loans, refinancing mortgages, or commercial property loans, contact Phil with no obligation: 617-529-9317

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