The lenders charge interest which is one part of their compensation for providing the funds to pay the premium. Interest may be paid or accrued depending on what the client wants and what the lender will allow. All lenders charge a spread which is a additional piece of their compensation. Spreads are added to either “prime” or one of several “libors”, 1 month, 3 month or 1 year. So as an example, we may quote a rate as Prime +2% or 1 month libor + 1.4%.
The chart below shows how rates have changed over the past 20 years. It also demonstrates how these rates will typically fluctuate in the same direction.
Our goal at Verite is always to deliver the best (lowest) interest rate available based on the clients' financial strength.