Who cares about the Libor scandal? YOUR MORTGAGE THAT’S WHO.
If you have a fixed interest mortgage rate you can stop reading this article right now. That is, unless you have student loans, credit card debt, or a car loan. What we’re getting at is that if you have any form of debt or loan here in the US chances are, one or more of those debts is tied to the Libor Rate.
What is the Libor rate? In simple terms, it’s the Grandaddy of all interest rates, it’s the rate that all others are tied to. What this means is that as the Libor rate goes so does your interest rate. That’s why when it was discovered that big banks were conspiring to artificially adjust this rate for their own benefit, people got upset.
Upset, however, is an understatement. Here in the US this Scandal hasn’t received much coverage which is surprising, seeing as many consumer loans here have been affected. People are going to start paying a lot more attention however after it was announced that the Central banks are meeting to discuss whether or not to Scrap the Libor rate all together.
We realize this couldn’t be a more boring subject to pay attention to, so we here at Cambridge Properties promise to keep taabs on this story to help keep you informed. Here is the headline from the more in depth Reuters article, “Central bankers and regulators will hold talks in September on whether the troubled global Libor interest rate can be reformed or whether it is so damaged that the benchmark of borrowing costs should be scrapped.”
Central Bankers are not the type to use undue hype and hyperbole, which is why the statement that it’s now, “very clear that radical reforms of the Libor system are needed” is so concerning.