In the theme of this release of SPV, we give an introduction to LIBOR market models. The new legislation on covered bonds, opens up for a larger variety of mortgage bonds with complex coupon structures. As a consequence, a need for more flexible interest rate models and valuation procedures may arise. We present a simple LIBOR market model with a volatility skew for caps and a parametric correlation structure. We calibrate the model to OTM caps and ATM caps and swaptions, and then use the calibrated model to price a non-callable capped floater.