Libor Mortgages.

[pwg6565]

I have had a Libor based tracker mortgage + 4.2% for the last 8 years. With the findings and ongoing investigation into rate fixing are we going to be able to make claims at some stage ??

[freakyleaky]

Good question.

I'll flag this up fro the rest of the team to look at.

[iconoclash]

hi - yes Ive been wondering how this might have impacted on previous loans and/or mortgages - since the rates were being fixed behind our backs how are we gonna know when they should have been lower etc?

[pwg6565]

Watching the news today the experts seem to be divided as to whether people have been hard done by. My own view is that the Libor should be very close to the standard bank rate.

LIBOR fell to a record low of 0.54% in September 2009, bobbed around that mark for a while and then began to edge higher. It stabilised a little above 0.60%, representing a 10 basis point gap with the UK bank rate (base rate) of 0.50%.

Before the start of the 2007-08 credit crunch, the gap between the base rate and three-month sterling Libor was around 10 to 20 basis points. remains within pre-credit crunch levels. The gap widened massively (see below) in autumn 2008 but then was back to 'normal' in late 2009 and 2010. In August and September 2011, it moved out of the 'normal' range again, although not to the extent seen in the credit crunch.

Key points:

• The fear measure gap or 'spread', worryingly, increased from 25 points to 59 points in 2011, and was a rise from just 4 points at the post-banking crisis low in mid 2009.
  
  
• This gap was 10 to 20 points during 'normal' pre-credit crunch conditions.
  
  

 

Read more: http://www.thisismoney.co.uk/money/markets/article-1645325/LIBOR-Latest-inter-bank-lending-rate-charts.html#ixzz1z5PMlTeF

[andrew1]

There's another more worrying concern I have on this. Barclays funded the sub-prime market and our loan provider was completely funded by Barclays and we are told that the interest rates were linked to Libor. Since 2006 our loan has increased in interest rate 5 times when the bank rates and Libor have tumbled.

 

Fine, but I now read all this about alleged criminal offences being committed and fraud in Barclays which has just seen one big head roll and no doubt countless legal claims being made against Barclays as a result.

 

If that is the case and litigation is being taken by the sub-prime lender against the borrower with potentially repossession at it's core, is there not a case for litigation to be suspended on the grounds that this is a 'Proceeds of Crime' issue and borrowers would not know if they are paying money which is subject to a criminal offence being committed and paying far too much?

 

I can't see how a lender can assess a correct amount owed or whether they have been charging too much interest throughout the term of the loan no matter how 'innocent' the lender may be (if you can call any lender in the sub-prime market 'innocent!) if a criminal offence has been committed then I think litigation should be suspended....any thoughts on that one too?

 

A1

[lookinforinfo]

The Mail online has an interesting article about the Libor rate=perhaps the b anks aren't the only ones involved

http://www.dailymail.co.uk/news/article-2168449/Bob-Diamond-resignation-Ousted-Barclays-boss-makes-damning-claims-Bank-England-Labour-ministers-involved-rigging-rates.html

[Bang!]

I have not read anything about recent events on this topic.

 

However, suspect the LIBOR rate would be artificially lowered by the banks, to make their businesses appear more financially stable, and create a better (credit) rating thereby enabling greater access to better priced money.

 

This in turn would make the UK look a safer nation for banking, so its not difficult to see the government pushing the same agenda.

 

From this (unless there are other related events not covered) the rate fixing would work in the favour of borrowers.

[Bang!]

I checked through the details earlier today - and they did lower the rates, so for mortgage holders it was actually beneficial.

 

The only losers would be people with invested vehicles from institutions found fixing rates, and tied to the LIBOR rate, as effectively with the rate being artificially fixed they theoretically received less than their entitlement in returns.

[ronnie11]

How would the Libor manipulation have affected business lending??

[pwg6565]

I have a Libor Tracker Mortgage. This has gone up over the past few years while the Bank of England rate has stayed at an all time low.

LIBOR soared during the worst phase of the credit crisis in 2008 and 2009 and then plunged as the authorities reacted to protect banks and push down the cost of lending.

Key points:

 

• The fear measure gap or 'spread', worryingly, increased from 25 points to 59 points in 2011, and was a rise from just 4 points at the post-banking crisis low in mid 2009.
   
  
• This gap was 10 to 20 points during 'normal' pre-credit crunch conditions.
  

There is no way I have benefited from Libor.

[iconoclash]

I have a Libor Tracker Mortgage. This has gone up over the past few years while the Bank of England rate has stayed at an all time low.

LIBOR soared during the worst phase of the credit crisis in 2008 and 2009 and then plunged as the authorities reacted to protect banks and push down the cost of lending.

Key points:

 

 

• The fear measure gap or 'spread', worryingly, increased from 25 points to 59 points in 2011, and was a rise from just 4 points at the post-banking crisis low in mid 2009.
   
  
• This gap was 10 to 20 points during 'normal' pre-credit crunch conditions.
  

There is no way I have benefited from Libor.

Hi - I thought I heard something about this kind of 'manipulation' going on for years, from much earlier - is that right and where can I look for information re rates around 2002 - 2006 to see if they were higher rather than lower. Is this too basic an idea about costs to the consumer? thanks

[applecart]

Hi - I thought I heard something about this kind of 'manipulation' going on for years, from much earlier - is that right and where can I look for information re rates around 2002 - 2006 to see if they were higher rather than lower. Is this too basic an idea about costs to the consumer? thanks

 

Here's what your looking for: http://www.global-rates.com/interest-rates/libor/british-pound-sterling/british-pound-sterling.aspx

 

goes back to the 1980's.....

 

First step is to check and use the charts to establish what the libor rate was - and cross check it against what a lender charged you as being the libor element of your loan.

 

Having said that, recent reports clearly identify that the libor rate was manipulated - so the issue is.... can any borrower be sure that the Libor quoted to them in interest rate notices sent by lenders was the correct rate even if it matches what the published libor rates say? (regardless of whether the rates were manipulated up or down) - The answer against the evidence in the public domain is a resounding - NO!

 

Best not to fall into the trap of assuming that the investigation was to do with Barclays per se - The investigation was set to look in to the matter of manipulation of the LIBOR rates....

 

Have a look at the detail of the fines on Barclays by the USA and the UK authorities to-date:

 

http://online.wsj.com/public/resourc...rder062712.pdf

 

http://www.fsa.gov.uk/static/pubs/fi...lays-jun12.pdf

 

Apple

[sweetjane]

Reports suggest LIBOR was artificially inflated prior to the crisis. Attached is what Swift Advances said about how loans were related to LIBOR when we asked why interest rate not going down when BOE rates fell. I have written to FSA (FCA co-ordinator), OFT, various MPs including mine & Mark Hoban and a couple of journalists today to ask who is taking this on for over 250,000 families (current & past) including those who have lost their homes and who may be directly affected by this rate fixing scandal. These are families in the sub-prime market who cannot afford the kind of fancy barristers engaged by banks, lenders and finance companies. SJ

LIBOR LOBLACK0001.pdf

[andrew1]

Specifically related to sweetjanes response here. This reply came from the legal department of Swift in relation to the question with regards to this Libor scandal:

 

"We refer to the above matter and telephone conversations and e-mail of even date. Your loan is subject to a variable rate of interest set by Swift Advances plc. It is not a tracker linked to any reference point or base rate linked loan and does not, therefore, incur an automatic interest rate or payment adjustment when there is a movement in LIBOR, The Bank of England’s or other Bank’s base lending rate.

 

Swift Advance plc sets the interest rate applied to your loan based on a number of factors but, for the avoidance of doubt, your loan’s interest rate is not automatically adjusted in line with the interest rate reference points mentioned above. Swift is not a member of the British Bankers’ Association and has no role in the setting of LIBOR"

 

 

Cop out to suit themselves! - what I also have is a copy of a letter from 2007 from Swifts Compliance manager which states that their 'cost of funding' includes Libor. So Libor is certainly an issue even when these companies deny it. The costs of borrowing money (to lend to us) must be related to something otherwise where do they get their benchmark interest rates to lend? Thjis is not just Swift, it relates to all these sub-prime lenders

[pwg6565]

Any news or updates anyone regarding LIBOR ????

[joy1958]

I've been looking at my mortgage and in 2008 my lender sent me a letter which I've only just found it tucked away and it states

In order for us to fund and maintain your mortgage we borrow wholesale funding from one of the major banks.The rate at which we obtain our funding depends on the London Interbank offered rate (LIBOR).In response to the recent banking crisis LIBOR has risen significantly compared to the Bank of England base rate.In addition the margin charged by all banks for lending to companies like us has doubled.This means that it has become more expensive for us to borrow the funds required to offer and maintain your mortgage.

Over the last 14 months we have absorbed this cost.We can no longer afford to do so.

Regrettably we have to pass on some of that increase to the client.

Interest rate on my account was 7.04% fixed for 3 years once the fixed period ended the interest rate on their standard variable rate was 4.50% plus additional 2.94% making it 7.44% but as of Dec 1st 2008 the standard variable rate went to 6.50% and additional interest of 2.94%

I've printed off the rates for 2007/08/09/10/11/12/13

October 2008 high 5.844% low 4.625%.

November 2008 high 4.534% low 3.013%

December 2008 high 3.006% low 1.969%

It continued to drop so what implications does this have on someone with a mortgage?Is the mortgage invalid?As it's attached to the LIBOR/Scandal rates which have and are still being investigated?

[pwg6565]

Barclays Bank beefs up Libor scandal fund

 

 

Wednesday, 06 February 2013 00:00 1 Comment and 0 Reactions

 

London. - Scandal-hit British bank Barclays said yesterday that it will set aside another US$1,6 billion to cover compensation for the mis-selling of both credit insurance and interest rate hedging

products.

Barclays, which was rocked last year by the separate Libor rate-rigging scandal, said in a brief statement that it hiked its provision for the mis-selling of payment protection insurance by another £600 million, taking its total bill to £2,6 billion.

The lender added that it would also increase its provision for the mis-selling of interest rate hedging products to small businesses by £400 million to a total of £850 million.

Barclays made the announcement ahead of its 2013 results statement which is due on February 12, when it will give more details on the provisions.

Group chief executive Antony Jenkins had announced last Friday that he would give up his 2012 bonus after a “very difficult year” at the troubled bank.

Barclays slumped into crisis last June when it was fined £290 million by British and US regulators for attempted manipulation of Libor and Euribor interbank rates between 2005 and 2009.

The Libor system was found to be open to abuse, with some traders lying about borrowing costs to boost trading positions or make their bank seem more secure.

Jenkins recently ordered all Barclays employees to sign up to a new ethical code of conduct or quit, as he sought to draw a line under the damaging episode. - AFP.

[pwg6565]

http://www.independent.co.uk/news/business/sharewatch/investment-view-libor-woes-for-banks-could-end-up-as-a-car-crash-8480831.html

[steampowered]

There are a number of big commercial cases being pursued against the banks in relation to LIBOR. See http://www.thelawyer.com/no-sign-of-an-end-to-bank-woes/3000384.article. Legally, these are very problematic cases because it will be extremely difficult to prove that (1) the manipulation actually affected LIBOR and (2) you suffered loss as a result.

 

Actually, much of the manipulation of LIBOR was downward not upwards. The biggest manipulation was downwards at start of the credit crunch. Certain banks deliberately gave low LIBOR submissions because they wanted to give the impression that they could still borrow at a low rate, which would give the impression that financial markets still had confidence in them. We will have to wait to see what comes out of the cases being pursued at the moment but people should not assume that they have lost out - if you had a basic LIBOR loan or mortage, you probably gained overall.

 

The headline "Barclays Bank beefs up Libor scandal fund" is wrong. The fund is for the misselling of PPI and interest rate hedging products. This has nothing to do with LIBOR. As far as I'm aware I don't think any of the major banks have set aside money for the LIBOR scandal.

 

I think the best route is to wait and see what these big cases say.

[pwg6565]

The Libor rate was very high at some points compared to the base rate and for people such as myself Mortgages payments were much higher than they should have been.

http://www.thisismoney.co.uk/money/markets/article-1645325/LIBOR-Latest-inter-bank-lending-rate-charts.html

[pwg6565]

I have just written a letter of complaint to my mortgage lender regarding Libor rates.

[andrew1]

Well done, let us know what comes back....

 

A1

[pwg6565]

http://www.ibtimes.co.uk/articles/465343/20130507/mis-selling-derivatives-bully-banks-irsa-redress.htm

[pwg6565]

http://libor-compensation.com/

[pwg6565]

http://www.bloomberg.com/news/2013-10-14/libor-splits-u-k-judges-as-barclays-case-goes-to-appeals-court.html