Midwest Capital Corporation can offer its clients pricing based on a variety of indexes. The offered rate will be the sum of the chosen index rate plus a spread.
LIBOR
London Interbank Offer Rate is an average of the interest rates that major international banks charge each other to borrow US dollars in the London money market. Like the US treasury the CD indexes, LIBOR tends to move and adjust quite rapidly to changes in interest rates.
Prime Rate is the interest rate charged by banks to their most credit-worthy borrowers.
FHLB Index
The Federal Home Loan Bank (FHLB) -- one of the 12 regional Banks of the Federal Home Loan Bank System. The Banks were established to extend loans and provide various services to member institutions including savings and loan associations, savings banks and insurance companies. The FHLB establishes index rates used by member banks to price loans. Midwest Capital Corporation sets its rates based on the Seattle or Dallas FHLB index for 5 year and 10 year ARM rates.
SWAP Index
A SWAP is defined as a transaction in which two counterparties exchange interest payment streams of differing character based on an underlying notional principal amount. The three main types are coupon swaps (fixed rate to floating rate in the same currency), basis swaps (one floating rate index to another floating rate index in the same currency) and cross-currency interest rate swaps (fixed rate in one currency to floating rate in another).