Libor rates see record rise

Inter-bank lending rates have hit their highest point for more than seven years last night despite intervention from central banks, according to the British Bankers’ Association (BBA).

Overnight Libor for dollar borrowing hit 6.87% as the continuing market turmoil made banks wary of lending to each other.

Libor is now at its highest rate since early 2001, and saw its biggest daily rise on record.

Central Banks across the world attempted to intervene after the US Congress rejected a $700bn bail-out plan, but the action was not enough to calm the fears of bankers.

The rise in Libor rates is likely to affect the price of mortgage deals, which have already increased after inter-bank rates spiked following the collapse of Lehman Brothers.

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