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How do I know if my mortgage or other loan is tied to the LIBOR index?

If you have a fixed rate loan, LIBOR does not affect you. If you have an adjustable rate loan, you may be affected by LIBOR, but not necessarily. While many, if not most, adjustable rate mortgages are tied to LIBOR, your loan may be tied to a different index. Your loan documents and possibly even your monthly loan statement will tell you if your rate is tied to the LIBOR. If you can’t find the information there, you can call your loan servicer and ask.

In the "LIBOR scandal" of mid-2012, accusations were made that LIBOR had been manipulated by the banks that determine the benchmark's rate—allegedly since the early '90s—to either make money or to make their bank and the banking system as a whole appear stronger. Because in that particular instance the interest rates had been manipulated downward, average borrowers with LIBOR mortgages, student loans and other forms of credit most likely benefited from the manipulation. However, some consumer and institutional investors may have experienced lower returns on their money.

 

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