By the end of the year, all mortgage lenders and other financial services firms will stop offering products linked to LIBOR (the London Interbank Offered Rate).
This change is required by our regulator, the Financial Conduct Authority (FCA), and it means all LIBOR-linked mortgages must move to an alternative reference rate.
We want the fairest outcome for everyone so none of our customers are left worse off. We’re exploring alternative rates right now to decide what’s best.
As soon as we’ve made a decision, we’ll get in touch with every customer that has a LIBOR-linked mortgage. We’ll explain more about the new reference rate and how it’ll impact them. We’ll do this before we make any changes.
While we’re choosing our new reference rate, we’ve pulled together a handy list of FAQs to help you understand more about this change and what it means for you.
LIBOR stands for London Interbank Offered Rate. It is the rate at which major banks will lend to one another in the interbank market (over periods of overnight, one week, one month, two months, three months, six months and twelve months) and has been used as a key interest rate benchmark across a wide range of financial products including mortgages.
The LIBOR benchmark relies on estimates from banks of their borrowing costs in markets which are no longer active, so international regulators no longer consider LIBOR sufficiently robust or sustainable given its widespread use.
In July 2017 the Financial Conduct Authority (FCA), confirmed that, the FCA does not intend to sustain LIBOR through its influence or legal powers beyond 2021 and made clear that financial institutions must transition impacted customers to alternative rates before that date.
All mortgage lenders have been proceeding on this basis and it has since been confirmed in March 2021 that LIBOR will no longer be available after end-2021. Subsequently, lenders globally have been working to move customers onto safer and more transparent benchmark rates.
We are considering which alternative reference rate will best suit the needs of our customers. The change must come into effect by the end of December 2021, we will keep you advised as the year progresses and notify all impacted customers in writing before making any change.
If your rate is fixed there will be no impact until the end of your fixed rate period. Your interest rate will then be calculated against the alternative reference rate rather than LIBOR.
If your interest rate is variable (e.g. your fixed rate period has come to an end), the interest rate charged on your mortgage increases and decreases in line with LIBOR. After the transition, the interest rate will follow the alternative rate instead.
The FCA has made it clear that LIBOR transition should not be used to move customers with LIBOR linked mortgages to replacement rates that are expected be higher than LIBOR would have been over the remaining life of the loan, or otherwise introduce inferior terms.
Like LIBOR, the alternative interest rate that is applied to your mortgage may be a variable rate, so may increase or decrease in the future. We will be in touch before we make any change to tell you more about the replacement rate that will apply to your mortgage and how this is calculated.
No. You will not be charged any fees in relation to this change.
We will write to tell you at least 28 days before we make any change, unless we have to make the change more quickly because of a change in law or regulation.
If you are struggling to meet your mortgage payments or worried about future payments, please don’t put off talking to us about this. The sooner we understand your circumstances, the quicker we’ll be able to discuss and explore the options that may be available and offer you support.
Please contact our Customer Support Team on 0344 257 0427 (lines available Mon-Fri 09.00 – 17.30)
or email firstname.lastname@example.org. (please remember to quote your account number in any email correspondence, but avoid sharing other sensitive personal details).
So we can provide you with appropriate support, please contact our Customer Services Team on 0344 257 0428 (lines available Mon-Fri 09.00 – 17.30)
or email email@example.com (please remember to quote your account number in any email correspondence, but avoid sharing other sensitive personal details).
There are a number of external sources of information which you may find useful: