Libor Fall

The British Bankers Association Libor dropped well below its 3 and 12 monthly average on Thursday. These figures are being taken as a sign that the credit markets are easing. It was however too early to say if this would have an immediate effect on lenders and rates.

Lenders interest rates are based on many factors as well as those of Libor and the Bank of England. It is up to lenders how they use the rates but the next month or two will be difficult but very often financial crises only last a maximum of four months.

There could be a gradual trend of banks willing to lend to each other. The Federal Reserve board are to meet and are expected to reduce federal funds by a quarter or possibly half a per cent.

Many lenders change their rates, in relation to Libor, only every three months so the effects of recent problems will take a while to come to light.