Note: This is a crossposted piece of content for blurt.world that I created on 9/16/20. I own and have created this content, see details below.
The London Interbank Offered Rate (LIBOR), is a short-term interest rate that banks use to loan one another money. It is typically for short-term loans, and is determined on a daily basis through a consensus between 16-banks worldwide. How does this affect the consumer, and what should you know?
Currently, the short-term LIBOR rate for 1-month is 0.16%, which is down markedly since last year, when it stood at 2.06%. The rate is established by ICE, and is a consensus average that 16-large banks determine.
How does LIBOR affect you?
Mortgage rates, especially adjustable rate mortgages, are impacted by LIBOR rates. As it costs banks more to lend money between themselves, they must charge more for loans. The LIBOR
Investments are impacted by LIBOR rates, particularly speculative stocks, investments that pay dividends and fixed-income investments including corporate bonds. Generally speaking, as interest rates increase, fixed income assets decrease in value. When the LIBOR rises, money will be routed into markets that are more speculative to generate a higher return than the fixed rate. If you have cash, you should watch these rates to begin investing as asset prices float upwards.
It is sure that LIBOR rates impact our entire financial system, and it impacts your ability to borrow money and get a return on your money. You can watch the rate daily and use it to impact you decisions to refinance your debt. Likely, you will want to buy when rates are high and refinance when rates drop. Watch the LIBOR and you can make a decision on how to deploy your capital and use debt.
Originally published in my blurt account at the link below:
Also published in my Steemit account at myblurtrides1.
Image from Pixabay.
LIBOR rate taken from Google.