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A LIBOR Follow-Up: Some Good News

by Howard Bell, Your Property Path


Happy faceLIBOR: What It Is

The London Interbank Offered Rate is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale money market. Most variable mortgages and short term loans are based on this rate. If it goes up your ARM follows.

What It Means To You

The LIBOR rates have almost doubled, reflecting the fact that banks perceived so much risk. They didn’t know whether the bank they loaned to would be there next week. Now we are watching some encouraging trends, bare beginnings but still positive. Key short-term lending rates fell again Tuesday. LIBOR, for three-month dollar-denominated loans fell to 4.63% from 4.72% while one-month rate declined to 4.46% from 4.56%. It has to mean that banks are beginning to see a little less risk and that is the first step towards loosening credit.

More Good News!


California: Notices of default filings, the first step of a foreclosure process — fell 61.8 percent in September compared to August and fell 36.4 percent compared to the same month last year, reports data company via MarketWatch)

The Feds Plan begins to Kick In


  1. OCT 27th – The Fed’s commercial paper facility will begin.
  2. NOV – The TARP program will begin buying toxic mortgage backed securities. The banks have already received 250 billion in fresh capital and after the TARP auctions, bank balance sheets will begin to look a lot better. Once credit is looser and the financial system is on a better track, we hope that the housing crises will begin to see an early dawn.

No doubt, there is much work in front of us and we are certainly victims to headline events, but maybe we are seeing the early signs of stabilization. Keep your fingers crossed.

Howard Bell PFP CCRM is the founder/editor of featuring over 450 articles on property management, trade talk for the San Francisco real estate industry. Howard is a property manager in San Francisco and holds a certification in financial planning.

See Howard Bells feature Biggest Bailout in US History.

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