More potential doom

[doodab]

The bad news is that Libor is one of the key elements in mortgage pricing, and a sustained rise in Libor soon feeds through to higher fixed rate loans."

Good job the mortgage market is so slow then

[russell]

LIBOR approaches 1%.

"Libor is the rate at which banks are prepared to lend money to each other, and this morning it hit 0.99813%. What does it mean? Essentially that the banks are charging each other almost twice as much as the Bank of England's base rate of 0.5% to borrow money for three months.

In normal conditions, the gap between base rate and Libor is typically 0.2%, but the rise to 0.5% indicates growing alarm among banks as to whether they should be lending to each other. But while the rise is worrying, the 'spread' between Libor and base rate is still below the 1.7% rate it hit in October 2008 when banks were collapsing and the taxpayer was bailing them out.

The bad news is that Libor is one of the key elements in mortgage pricing, and a sustained rise in Libor soon feeds through to higher fixed rate loans."