A mortgage linked to LIBOR will be
charged at a given margin over the Interbank rate (typically 1 to 1.5%) and is
likely to be reset quarterly.
LIBOR rates tend to be more volatile than variable mortgage rates as the rate
payable will change almost every quarter. They offer the customer the
opportunity to pay a rate closer to the true cost of money. In a low interest
rate environment they are likely to result in lower overall payments but will be
more expensive in periods of higher interest rates.