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The LIBOR rate is falling learn how this will help home owners


The housing industry has been in peril for the past 12 months, some underlying good news awaits home owners who have adjustable rate mortgages.

The LIBOR is short for the London Inter Bank Offered Rate has taken a sharp decline over the past 12 months. So why should home owners in the United States care about a rate in London? Well the short answer is that almost all variable rate mortgage programs that have been originated over the past 3 to 5 years are now using the LIBOR as their economic index that they attach the interest rate to. This is great news for home owners who have adjustable rate mortgages set to adjust over the next 12 months and have been unable to refinance into a new loan. The drop in the LIBOR rate will mean that in most cases home owners will see a very minimum increase with their house payments and in some cases they will actually see a decrease with their house payments. The residual effect of the global credit crunch and the fed lowering rates is that the six month LIBOR one of the most common index's is now hovering around 3% down over 2% in the past 12 months and could potentially continue to trend down if the U.S. continues to cut the fed funds rate. Finally some good news!


2-6-2008 ? LoanNetwork.com





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