A nice article that explains a bit what is going on with the London Inter Bank Offered Rate (LIBOR) is here. LIBOR is an important global interest rate benchmark. LIBOR is high because banks want to avoid lending to one another. They don't know if one of their counterparties is going to be the next bank to become insolvent.
LIBOR is a benchmark that is used to set a lot of floating rate business and consumer loans. When it goes up, as it is right now, loan payments go up.
From that Bloomberg article:
The spread charts and financial acronyms mean real pain for people like Maureen McNally of Trenton, Florida. The monthly payments on her Libor-linked mortgage from Countrywide Financial Corp. have climbed to $769 from about $500.
``I had to give up my cable television, I had to give up my house phones, because I had to cut back completely,'' said the 53-year-old gift processor at the University of Florida in Gainesville. ``I am so disgusted with this whole mortgage thing I never want to own a home again.''
McNally says she's had her house on the market for nine months without an offer.
Thursday, October 9, 2008
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2 comments:
You should keep blogging on financial meltdown issues. There probably aren't many Canadian bloggers with the same kind of experience in the markets as you have.
Thanks. Great Post.
Information is good.
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