IDEAS home Printed from https://ideas.repec.org/a/fip/fedcec/y2012ioct11n2012-14.html
   My bibliography  Save this article

Alternatives to Libor in consumer mortgages

Author

Listed:
  • Mark E. Schweitzer
  • Guhan Venkatu

Abstract

Many adjustable rate mortgages in the United States are indexed to Libor. While the accuracy of this rate has recently been called into question, another issue affecting U.S. borrowers has become evident since the onset of the financial crisis. Specifically, many U.S. consumers with Libor-based loans may have been hit with substantially higher payments when their loans reset during the financial crisis than if those loans had been tied to a Treasury rate. We investigate several alternative reference rates for consumer loans and estimate their payment effects on a large sample of Libor-linked U.S. mortgages. We find that these alternatives would have delivered average monthly savings over Libor of about $25 to $45 and substantially more for mortgages that reset in October 2008.

Suggested Citation

  • Mark E. Schweitzer & Guhan Venkatu, 2012. "Alternatives to Libor in consumer mortgages," Economic Commentary, Federal Reserve Bank of Cleveland, issue Oct.
    • Handle: RePEc:fip:fedcec:y:2012:i:oct11:n:2012-14
    DOI: 10.26509/frbc-ec-201214
    as

    Download full text from publisher

    File URL: https://doi.org/10.26509/frbc-ec-201214
    File Function: Full Text
    Download Restriction: no
    File URL: https://libkey.io/10.26509/frbc-ec-201214?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedcec:y:2012:i:oct11:n:2012-14. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: 4D Library (email available below). General contact details of provider: https://edirc.repec.org/data/frbclus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.