LIBOR - where is it going?

[johnfm]

As per my thread in the P&P, I have teh chance to refinance all my borrowing at either;

3.05% over BOE base rate OR


2.25% over 3 month LIBOR.


It is a substantial amount of borrowing - so even a small reduction is worthwhile.

Any ideas whether LIBOR is heading down to a bit closer to BOE base rate?

[Horse_Apple]

johnfm said:

As per my thread in the P&P, I have teh chance to refinance all my borrowing at either;

3.05% over BOE base rate OR


2.25% over 3 month LIBOR.


It is a substantial amount of borrowing - so even a small reduction is worthwhile.

Any ideas whether LIBOR is heading down to a bit closer to BOE base rate?

The theory is that GB's rescue package will allow this to happen, but after a small pullback on the day of announcement this hasn't really happened and is not looking like it will in the short term. I.e the package is beginning to look shakey, especially today and I suspect LIBOR may have moved back out again when we look at it tomorrow.

It's a tough call and you have to make your own choice but I suspect that base rates may go lower as BofE claim inflation is coming under control (although unexpected hikes in unemployment ie people that GB is not able to get registered as long term disabled will scupper that) whereas, LIBOR may well head outwards again if what we have seen today persists.

In other words, absolutely no idea but I suspect that linking to base may prove to be more stable if not cheaper in the medium term.

[johnfm]

Whatever I do I am in it for 12 months.

Bank is squeezing me, as I am currently on 2.25% over base, which is losing them money.

But they have me over a small barrel.

[Tyre Smoke]

I'm no expert, but would go at 3.05% over base.

[edb49]

I'm guessing the bank is pricing in their forecasts for LIBOR and the base rate, so the two offers you have from them are identical in their eyes. I would just flip a coin, the bank has got more time to spend thinking about LIBOR than I have.