It's another index for ARMs. Some of the indicies are more or less volatile. In a market of falling rates, you want an index that moves as quickly as possible and the opposite for rising rate.
Other important factor are the margin (the portion the bank makes) which is added to the index, to give you the real rate of the note.
I assume you meant a LIBOR mortgage.....this is just one of many different index lenders use to base their rates upon. The one month Libor has been between 1.1 and 1.2 for a while now and when added to the margin gives you the rate which you wil be paying.... their are 1 month Libor (lowest but can change every month) 6 month and 1 year....
what is hard is trying to figure which will move the least between all of the different index...LIbor, cofi, COSI Prime rate etc......[ Edited by BMan on Date 06/08/2004 ]
LIBOR. London Interbank Borower Offerer Rate.
It's another index for ARMs. Some of the indicies are more or less volatile. In a market of falling rates, you want an index that moves as quickly as possible and the opposite for rising rate.
Other important factor are the margin (the portion the bank makes) which is added to the index, to give you the real rate of the note.
There is also the period cap, and life time caps.
Hope that helps.
I assume you meant a LIBOR mortgage.....this is just one of many different index lenders use to base their rates upon. The one month Libor has been between 1.1 and 1.2 for a while now and when added to the margin gives you the rate which you wil be paying.... their are 1 month Libor (lowest but can change every month) 6 month and 1 year....
what is hard is trying to figure which will move the least between all of the different index...LIbor, cofi, COSI Prime rate etc......[ Edited by BMan on Date 06/08/2004 ]