LIBOR stands for London Inter-Bank Offered Rate. This is a favorable interest rate offered for U.S. dollar deposits between a group of London banks. There are several different LIBOR rates, defined by the maturity of their deposit. The LIBOR is an international index that follows world economic conditions. LIBOR-indexed adjustable-rate mortgages offer borrowers aggressive initial rates and have proven to be competitive with popular ARM indexes like the Treasury bill.