❗Let's close the gap: We still need your help to raise $40,000 by April 1. Donate now

Buzzword: LIBOR

Marketplace Staff Sep 7, 2007
HTML EMBED:
COPY

Buzzword: LIBOR

Marketplace Staff Sep 7, 2007
HTML EMBED:
COPY

TEXT OF STORY

A growing pain brings us this week’s Marketplace Money buzzword: LIBOR.

“LIBOR” stands for London Interbank Offered Rate. It’s the rate which international banks charge each other for loans. It’s also used for calculating adjustable-rate mortgages.

And that’s where the pain comes in. Why? Because of the credit and subprime crises, the LIBOR is rising — fast. This week, it swelled to the highest level in six years. That means if you’ve got a $400,000 adjustable-rate mortgage, you could end up paying $47,000 more over the life of the loan.

Ouch, that hurts.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.