Q. My loan is tied to the London Interbank Offered Rates (LIBOR ) index as published in The Wall Street Journal. Is there any other LIBOR index?
A. Yes, besides the WSJ LIBOR lenders may use the monthly FNMA LIBOR (or a replacement index, since the original Fannie Mae LIBOR index has been discontinued* and has only historical values ).
* The final Fannie Mae LIBOR values were released on June 28, 2007. Starting from August 1, 2007 we offer the Mortgage-X Monthly LIBOR index as a replacement for the Fannie Mae monthly LIBOR.
Q. What is the official FNMA LIBOR replacement index.
A. There is no 'official' replacement. Fannie Mae has advised that lenders should 'consult their own counsel' regarding the appropriate replacement index for the original Fannie Mae LIBOR*.
* Having said that, Fannie Mae provides a methodology to come up with a substitute index value. Thus, the 1-Month Fannie Mae LIBOR Rate is replaced with the 1-Month LIBOR as published in the Wall Street Journal on or after the 25th day of each month. The 3-, 6-Month or 1-Year Fannie Mae LIBOR Rate is replaced with the 3-, 6-Month or 1-Year LIBOR as published in the Wall Street Journal on the first business day of each month.
Besides the 'Fannie Mae recommended'. there are several other replacements available, including the Mortgage-X Monthly LIBOR **.
** The Mortgage-X LIBOR is based on the corresponding LIBOR index quoted in the Wall Street Journal (print edition) and is computed by averaging the past month's daily rates of the underlying WSJ LIBOR.
Q. Fannie Mae has its own LIBOR and the Wall Street Journal has their own LIBOR, right?
A. No. The Wall Street Journal does not have it's own LIBOR. They publish yesterday's BBA LIBOR.
Q. What is BBA ?
A. British Bankers' Association. The BBA LIBOR is compiled by the BBA daily and is released on or shortly after 11.00 AM each day (London time).
Q. If the Wall Street Journal (print edition) publishes only yesterday's LIBOR, should I visit the BBA website for the current (today's) LIBOR?
A. No. On the BBA website you will only find the BBA LIBOR rates with a 2-month delay.
Q. Could you tell me why the Wall Street Journal (print edition) rates differ from the WSJ website rates.
A. The Wall Street Journal (print edition) publishes yesterday's BBA LIBOR. The print edition of the WSJ is generally the official source of the index.
Both Bloomberg and the online version of the Wall Street Journal show the index one day prior to the print edition of the Wall Street Journal, i.e. the online version of the Wall Street Journal (WSJ website) publishes today's BBA LIBOR, and the Bloomberg website also publishes today's BBA LIBOR.
Q. I have an ARM loan and my interest rate is due to change tomorrow. Which LIBOR do I need: today's or yesterday's?
A. You need neither today's nor yesterday's LIBOR. Most lenders use the most recent index figure available as of the date 45 days prior to a scheduled interest rate change date.
In the past, one could visit the BBA website and download the BBA LIBOR rate as of the date 45 days before your scheduled interest rate change date*.
* You cannot download the BBA LIBOR rate as of the date 45 days before your scheduled interest rate change date currently, as on the BBA website you can only find the BBA LIBOR rates with a 2-month delay.
Q. What's the difference between the BBA LIBOR and the Fannie Mae LIBOR ?
A. Each Fannie Mae LIBOR index (there are 5 of them: 1-month, 3-month, 6-month, 1-year, 12-month avg. of 1-month LIBOR) has only monthly values. The index is determined from information that is available on the second to last business day of each month.
The 15 BBA LIBOR rates (provided in ten currencies) are compiled by the BBA daily and released to the market shortly after 11.00am London time each day.
Q. Can I compute the Fannie Mae LIBOR based on the BBA LIBOR ?
Fannie Mae doesn't disclose their methodology and how their rates (if at all) are related to the BBA LIBOR rates.
Q. Is it possible to compute the Mortgage-X LIBOR based on the BBA LIBOR ?
A. Yes. Each Mortgage-X monthly LIBOR index is based on the corresponding LIBOR index quoted in the Wall Street Journal ( they post yesterday's BBA LIBOR ) and is computed by averaging the past month's daily rates of the underlying WSJ LIBOR.
Q. Can you provide historical data on the LIBOR since inception?
Some historical BBA LIBOR rates are posted on the BBA website (and if you don't know their website address, you can try to Google them).
The historical monthly Mortgage-X LIBOR rates are posted on our website. Data are available beginning from January, 2007.
We also compile monthly historical values for the average of the London Interbank Offered Rates (LIBOR ) for 1-month, 3-month, 6-month and 1-year U.S. dollar denominated deposits, as posted by Fannie Mae (FNMA ). Data are available beginning from September, 1989 .
FNMA LIBOR History
Q. Is the 12-month daily historical values an average figure? Because both the disclosure and note that I have refer to 'the average of interbank offered rates for one year US dollar-denominated deposits in the London market ('LIBOR') as published in the WSJ'. Should I use the 12-month daily figure to determine my mortgage rate?
A. The LIBOR as published in the WSJ, that actually is yesterday's BBA (British Bankers' Association) LIBOR, is an average figure by definition*.
* The BBA maintains a reference panel of several contributor banks. Their market quotes are used by the BBA to construct the BBA LIBOR: the top quartile and bottom quartile market quotes are disregarded, the middle two quartiles are averaged. The resulting average rate is the BBA LIBOR rate.
To determine your mortgage rate you should use the 12-month daily WSJ LIBOR value, plus the exact number of days prior to your interest rate change date used by your lender to determine the date on which the most current index value is selected.
Q. What happened to the daily historical values. Why the last 3 decimal points are not published?
A. The LIBOR index values provided were displayed there in their entirety, based on the permission from the British Bankers' Association (BBA) granted on Friday, July 25, 2008:
----- Original Message -----
From: "Peter Denton" <peter.denton "at" bba.org.uk>
Sent: Friday, July 25, 2008 4:39 AM
British Bankers' Association (BBA)
However, on Monday, August 15, 2011 we were asked not to display the said rates, as "BBA company policy has changed":
----- Original Message -----
From: Michael Keaney
Sent: Monday, August 15, 2011 5:31 AM
Subject: RE: Display of BBA LIBOR Data
Many thanks for your prompt reply.
When Peter Denton sent you the below letter, it was BBA policy that any data older than 7 days was freely distributed on a no-fee basis.
we changed our policy.
We apologise for any inconvenience caused and know you were acting in good faith in your display of the rates; however, our company policy has changed and we must now ask that Mortgage-X either cease their display of the rates .
Q. I need to compound the LIBOR since 1972 on a six monthly basis. I am having trouble finding the historic rates for my calculation and would greatly appreciate your assistance.
A. On the BBA website it is stated that '. BBA LIBOR fixings did not commence officially before 1 January 1986. '. It is further stated that '. due to the specific methodology of calculating BBA LIBOR it is not possible to reconstruct rates before the official fixings commenced. '. The historical data files posted on the BBA website make up the entire back history of BBA LIBOR and '. there is no BBA LIBOR data available before this point. '.
Historical Graph (Fannie Mae LIBOR)
The following graph reflects the movement of the 6-Month Monthly Fannie Mae LIBOR vs. 1-Yr CMT and 11th District COFI :