IMF of Key West



Indexes (Indices) for Rate of Interest

As borrower, your rate of interest frequently is based on an index (that rises or falls) plus a margin (usually a constant %). All indices move in sync just because money is a global commodity.

	1.	Federal Funds Rate: Set by the Federal Reserve's Open Market Committee, this is the rate which member banks charge for short term (usually overnight) loans. A lowering of the rate increases the availability of credit because it becomes cheaper.

	2.	Wall Street Journal: As reported in this newspaper, the rate is the average charged to big corporate customers for short term unsecured loans by two of America's biggest banks. Although there is no legal link between Federal Funds Rate and this Prime, historically this maximum is 3% higher. Currently Federal Funds Target Rate is 0 to .25% and the Prime is 3.25%. Most home equity lines of credit (HeLoc) are indexed to this Prime.

	3.	LIBOR (London Inter-Bank Offered Rate): Average rate for dollar denominated deposits among major banks in London. Quoted for 1,3,6, & 12 months, the one month LIBOR has ranged from .38% to 9.125% and the 12 month from 1.2 to 9.4% since September 1989.

	4.	Cost of Funds Index (C.O.F.I.): One of the most widely used is that of the 11th Federal Home Loan Bank District in San Francisco. Usually lags the market and is relatively stable.

	5.	Treasuries: Rates for short term obligations (bills) and long term (bonds) are available on Internet <moneycafe.com>. Advantages of a 3 or 5 year term is known debt service.

Independent Mortgage and Finance
600 Whitehead Street
Key West, Fl. 33040
Office: 305-294-5105
Fax: 305-294-5354
susie@KeysMortgages.Com
B.G. Carter, Principal Representative

Your Needs |What We Need to Get Started
About IMF | Contact Us | Main Page