Quick Scoop: What is LIBOR?

LIBOR stands for the London Interbank Offered Rate. It was a benchmark interest rate used for many loans and financial products, based on the rate banks expected to pay to borrow from each other short term.

In plain English

Think of LIBOR as a pricing reference for money. If a loan or mortgage was “set at LIBOR + 2%,” LIBOR helped determine the starting point for the interest rate.

Why it mattered

LIBOR was widely used around the world for things like adjustable-rate mortgages, corporate loans, and derivatives. That made it one of the most important reference rates in modern finance.

What happened to it

LIBOR has been phased out and permanently ended. The remaining synthetic LIBOR settings were published for the last time on 30 September 2024, and all 35 LIBOR settings have now ceased.

What replaced it

Markets have moved to alternative “risk-free” reference rates such as SOFR in the U.S. and other comparable benchmarks in different regions.

TL;DR: LIBOR was a major benchmark interest rate used to price many financial products, but it has now been retired and replaced by newer reference rates.