As the London Interbank Offered Rate nears retirement, quotes for a preferred replacement index for many of the loans and credit instruments that rely on it are now being published.
Before the subprime mortgage meltdown of 2007, home lenders often placed subprime borrowers in adjustable-rate mortgages — many that were indexed to LIBOR.
Such ARMs enabled consumers who otherwise might not qualify for a mortgage to finance a home purchase at rates that were lower than nonprime fixed rates — which could be several hundred basis points higher than prime rates.
Source: Mortgage Daily
