London InterBank Offered Rate (LIBOR) index is the
rate on dollar-denominated deposits, also know as Eurodollars,
traded between banks in London. The index is quoted for one
month, three months, six months as well as one-year periods.
is the base interest rate paid on deposits between banks in
the Eurodollar market. A Eurodollar is a dollar deposited in
a bank in a country where the currency is not the dollar. The
Eurodollar market has been around for over 40 years and is a
major component of the International financial market. London
is the center of the Euromarket in terms of volume.
LIBOR rate quoted in the Wall Street Journal is an average of
rate quotes from five major banks. Bank of America, Barclays,
Bank of Tokyo, Deutsche Bank and Swiss Bank.
most common quote for mortgages is the 6-month quote. LIBOR's
cost of money is a widely monitored international interest rate
indicator. LIBOR is currently being used by both Fannie Mae
and Freddie Mac as an index on the loans they purchase.
is quoted daily in the Wall Street Journal's Money Rates and
compares most closely to the 1-Year Treasury Security index.