The London Inter-Bank Offered Rate was an interest rate average calculated from estimates submitted by the leading banks in London. Each bank estimated what it would be charged were it to borrow from other banks. It was the primary benchmark, along with the Euribor, for short-term interest rates around the world. Libor was phased out at the end of 2021, with market participants encouraged to transition to risk-free interest rates such as SOFR and SARON.
A reference rate is a rate that determines pay-offs in a financial contract and that is outside the control of the parties to the contract. It is often some form of LIBOR rate, but it can take many forms, such as a consumer price index, a house price index or an unemployment rate. Parties to the contract choose a reference rate that neither party has power to manipulate.
The money market is a component of the economy that provides short-term funds. The money market deals in short-term loans, generally for a period of a year or less.
A variable-rate mortgage, adjustable-rate mortgage (ARM), or tracker mortgage is a mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets. The loan may be offered at the lender's standard variable rate/base rate. There may be a direct and legally defined link to the underlying index, but where the lender offers no specific link to the underlying market or index, the rate can be changed at the lender's discretion. The term "variable-rate mortgage" is most common outside the United States, whilst in the United States, "adjustable-rate mortgage" is most common, and implies a mortgage regulated by the Federal government, with caps on charges. In many countries, adjustable rate mortgages are the norm, and in such places, may simply be referred to as mortgages.
The Euro Interbank Offered Rate (Euribor) is a daily reference rate, published by the European Money Markets Institute, based on the averaged interest rates at which Eurozone banks borrow unsecured funds from counterparties in the euro wholesale money market. Prior to 2015, the rate was published by the European Banking Federation.
The prime rate or prime lending rate is an interest rate used by banks, typically representing the rate at which they lend to their most creditworthy customers. Some variable interest rates may be expressed as a percentage above or below prime rate.
This article gives descriptions of mortgage terminology in the United Kingdom.
TIBOR stands for the Tokyo Interbank Offered Rate and is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the Japan wholesale money market. TIBOR is published daily by the JBA TIBOR Administration.
The TED spread is the difference between the interest rates on interbank loans and on short-term U.S. government debt ("T-bills"). TED is an acronym formed from T-Bill and ED, the ticker symbol for the Eurodollar futures contract.
The overnight rate is generally the interest rate that large banks use to borrow and lend from one another in the overnight market. In some countries, the overnight rate may be the rate targeted by the central bank to influence monetary policy. In most countries, the central bank is also a participant on the overnight lending market, and will lend or borrow money to some group of banks.
A floating interest rate, also known as a variable or adjustable rate, refers to any type of debt instrument, such as a loan, bond, mortgage, or credit, that does not have a fixed rate of interest over the life of the instrument.
MIBOR is the overnight interest rate or reference rate based on the averaged interest rates at which Indian banks borrow unsecured funds from counterparties in the Indian rupee wholesale money market . The rate was originally published by the Fixed Income Money Market and Derivative Association of India (FIMMDA) and the National Stock Exchange of India (NSE). This was moved to a dedicated organisation, Financial Benchmarks India Private Ltd (FBIL) in 2015 which is jointly owned by FIMMDA, the Foreign Exchange Dealers’ Association of India (FEDAI) and the Indian Banks' Association (IBA). The rate is based on similar rates in London such as Libor and Euribor.
The interbank lending market is a market in which banks lend funds to one another for a specified term. Most interbank loans are for maturities of one week or less, the majority being overnight. Such loans are made at the interbank rate. A sharp decline in transaction volume in this market was a major contributing factor to the collapse of several financial institutions during the financial crisis of 2007–2008.
Romanian Interbank Bid Rate (ROBID) is the reference rate calculated by the Proxy as the arithmetical average of the last rates quoted by the each Participant in the Fixing for the RON deposits offered within 15 minutes before the Fixing after rejecting extreme rates. This is the rate at which banks offer to lend unsecured funds to other banks in the Romanian wholesale money market. It is similar to the widely used LIBOR, and Euribor. The rate quoted by each Participant in the Fixing represents the rate at which the RON deposits are offered to the other Participant for 15 minutes from the publication of ROBID and ROBOR rates by the Proxy.
Helibor was a reference rate that was used in 1987–1998 on the Finnish interbank market. It was calculated each day as an average of the interest rates at which the banks offered to lend unsecured, Finnish markka nominated funds to each other.
The mortgage industry of the United States is a major financial sector. The federal government created several programs, or government sponsored entities, to foster mortgage lending, construction and encourage home ownership. These programs include the Government National Mortgage Association, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.
Singapore Dollar Swap Offer Rate (SOR) is an implied interest rate, determined by examining the spot and forward foreign exchange rate between the US dollar (USD) and Singapore dollar (SGD) and the appropriate US dollar interest rate for the term of the forward.
The Prague Inter Bank Offered Rate (PRIBOR) is the average rate at which banks are willing to lend liquidity on the Czech interbank money market and as such, reflects the price of money on the market.
The Saudi Arabian Interbank Offered Rate (SAIBOR) is a daily reference rate, published by the Saudi Central Bank, based on the averaged interest rates at which Saudi banks offer to lend unsecured funds to other banks in the Saudi Riyal wholesale money market.
The Interbank Offered Rate (KIBOR) is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the Karachi wholesale money market. The banks used it as a benchmark in their lending to corporate sector.
