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12 month LIBOR
LIBOR - an abbreviation
for "London Interbank Offered Rate," and is the interest rate offered by a
specific group of London banks fo
r U.S. dollar deposits
of a stated maturity. LIBOR is used as a base index for setting rates of
some adjustable rate financial instruments, including Adjustable Rate
Mortgages (ARMs). LIBOR-indexed ARMs offer borrowers aggressive initial
rates (lower than many other ARMs) and has proved to be competitive with
such popular ARM indexes as the 11th District Cost of Funds, the 6-Month
Treasury bill, and the 6-Month Certificate of Deposit. With the LIBOR ARMs
borrowers are generally protected from wide fluctuations in interest rates
by periodic and lifetime interest rate caps. LIBOR ARMs usually do not
have negative amortization.
Index Rates:London Inter Bank Offering Rates (LIBOR)
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