LIBOR Rises 157 Basis Points To 3.94 percent
Recently, I wrote a blog entitled What is LIBOR? for Mortgage Law Network. It would be a good time to review that article now because LIBOR is going through the roof. Simply put, LIBOR is the London interbank offered rate. What? Good Question. It is the average rate that banks in and around London lend money to one another. Another Good Questions is: Why are we talking about LIBOR?
The reason we are worried about LIBOR is that your loan could be tied to it. If you obtained an adjustable rate mortgage in 2006 or 2007, the chances are pretty good that your loan was tied to LIBOR. With LIBOR moving higher, it means that when the rates reset, your mortgage payment will skyrocket.
Today, the Fed has hinted at a rate cut. This rate cut does not help you with your mortgage. Hopefully, the rate cut will help improve investor confidence, thereby settling everything down a little, and maybe LIBOR will come back down to reality.
The situation in the United States could get very ugly if the people who are hanging on to their homes and paying their mortgages get a rude awakening. Imagine getting your mortgage statement and your monthly payment has gone up several hundred dollarrs, and the reason that it has gone up is because some banks in London don't trust each other. I didn't hear either presidential candidate, Senator Obama or Senator McCain mention this issue last night during the debate.
This post was submitted by Carmen Dellutri, Esq., founder of The Dellutri Law Group, P.A. Currently, the firm has offices in Port Charlotte, Fort Myers, and Naples and has expansion plans for Sarasota. Mr. Dellutri also sits on the Board of American Board of Certification. Mr. Dellutri is also one of the founders of the Bankruptcy Law Network, Debt Law Network, Credit Law Network, and Mortgage Law Network. Mr. Dellutri also writes for the firm's personal injury litigation blog.
