Where do you think LIBOR will be in a year? (interest rate, rate) - Mortgages -Lenders, loans, financing, rates, foreclosures, short-sales, brokers, credit score, deed, lien, refinancing, borrowers - City-Data Forum

Rick Lee · 10-20-2008, 11:51 PM

With the dollar losing value with each new gov't. bailout and bond sale, I'm wondering how LIBOR will look in a year when my ARM adjusts. Yes, I know how the adjustment works. Just curious where you think it will be. My house is rented out for a two year lease, which doesn't expire until about four mos. after my ARM adjusts. I'm currently getting $25 positive monthly cash flow and would have been overjoyed just to break even. My rate is now 4.375%, so it's hard to beat. Still, I have had ARM's adjust down before.

VictorBurek · 10-22-2008, 06:05 AM

Well Rick Lee, first of all the dollar is getting stronger. You might want to check out sites such as bloomberg.com where you can see currency rates. The dollar earlier this year was 1.60 against the Euro, but today the dollar is 1.30.

Libor will be around the fed fund rate which is currently 1.5%. Historically speaking the 1 month libor is within a .25 of the fed fund rate. More then likely the fed will cut the fed fund rate at the end of the month to 1% which will bring the libor rate down. More then likely the fed fund rate will remain at 1% for some time. So, my prediction based on past history is the 1 month libor will be around 1 to 1.25 next year at this time.

Rick Lee · 10-22-2008, 08:33 AM

Thanks. I know the dollar has been getting better. But I can't see it staying that way. How can we not be hit with inflation soon due to crazy cheap money and massive new gov't. spending? A few weeks ago LIBOR jumped pretty big.

Modification Specialist · 10-22-2008, 12:59 PM

Rick

It a person could predict interest rates, that person would be the richest person in the world. I have been working the the mortgage business for the last 8 years.

I have research and found cycles - every four years interest rates are low, corresponding to an election year. After a presidential election year, interest rates have gone up.

The time between elections - twice a year the government adjusted interest rates to control inflation. June 15 and November 15th. Interest rate would go up before those dates, and go down after those dates.

Just like the price a gas - every summer the price goes up, and every October the prices go down.....

Look at history for your answer.........