LIBOR is the base interest rate paid on deposits between banks
in the Eurodollar market. A Eurodollar is a dollar deposited in
a bank in a country where the currency is not the dollar. The Eurodollar
market has been around for over 40 years and is a major component
of the International financial market. London is the center of the
Euromarket in terms of volume.
The LIBOR rate quoted in the Wall Street Journal is an average
of rate quotes from 16 major banks.
The most common quote for mortgages is the 6-month quote. LIBOR's
cost of money is a widely monitored international interest rate
indicator. LIBOR is currently being used by both Fannie Mae and
Freddie Mac as an index on the loans they purchase.
LIBOR is quoted daily in the Wall Street Journal's Money Rates
and compares most closely to the 1-Year Treasury Security index
