If you have a mortgage where the interest rate that you currently pay, or if you are currently on a fixed rate, will pay once that fixed rate ends, is calculated by reference to the London Interbank Offered Rate (LIBOR) there is a change that may affect your mortgage later this year.
Our regulator, the Financial Conduct Authority (FCA), has stated that the way in which LIBOR is currently calculated will not continue to be sustainable after the end of the year. The FCA has asked firms to consider what they could do to ensure that customers are not negatively impacted by this.
We are currently reviewing the information provided by the FCA and other industry groups to consider what options may be available to you.
At this stage, there is no change to your mortgage and it will continue to work in the same way as it has to date. You don’t need to take any action now, however, if you have any questions about your mortgage, please contact us. Please note there is no additional information that we can provide you with at this time about the potential changes to LIBOR. We will write to impacted customers in the coming months setting out more detail once this is known to us.
Please see below for more information.
What is LIBOR?
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, two weeks, one month, three months, six months and twelve months) and is currently used as a key interest rate benchmark across a wide range of financial products including mortgages.
What is happening to LIBOR?
The way in which LIBOR currently operates will cease by the end of the year because the Financial Conduct Authority (FCA) no longer see it as a sufficiently reliable, transparent, independent or representative interest reference rate. The concern is that continuing to allow use of LIBOR as it stands could cause detriment to customers in the future.
How do I know if I am impacted by this change?
This change only impacts upon customers with a mortgage with an interest rate that is calculated by reference to LIBOR. We wrote to those customers in April 2021.
What does this mean for me if I am impacted?
At this stage, you don’t need to do anything and your mortgage will continue as normal. We are currently looking into what options may be available to you. We will write to you well in advance of the 31 December 2021 deadline with more information.
Am I going to pay the same amount?
At this stage, there is no change to your mortgage and it will continue to work in the same way, including your monthly payments.
Will I have to pay any fees or other costs?
No, we will not charge you any fees if we have to make any changes to your mortgage relating to this.
What is the potential impact on me?
We are working hard to minimise the impact of this change on customers as far as possible. More information on any potential changes to your interest rate will be given to you in writing before any change needs to be made, to ensure that you have time to read and understand the information.
Why are you telling me about this now?
The FCA has asked all lenders to engage with customers early on this matter. You do not need to take any action at this point in time.