what are Swap and LIBOR Rates?
Hi all, Iíve had a few queries about the markets, as lots of customers are coming in wondering why mortgage rates and fees are still high despite the drop in Bank Rate to 2%. Well firstly, rates have thankfully dropped a lot this last month following the Bank rate cut, and the best buys show that we are now getting sub 4% trackers and fixed rates filtering through. However, the lowest rates continue to be subsidised with high arrangement fees, and you will have to keep doing the maths to help them work out what arrangement would suit them best over the few years they intend to keep the mortgage. We do tend to band about the terms LIBOR and swap rates, but you may not know the difference between the two, and most importantly, how they affect the new mortgage rates for your clients. The rather simplified explanation of LIBOR is as follows: Itís the London Inter Bank Offer Rate, which means that, as banks lend to each other every day for short amounts of time, such as overnight, one month
