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Buzzword: LIBOR

Marketplace Staff Sep 7, 2007
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Buzzword: LIBOR

Marketplace Staff Sep 7, 2007
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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.

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