LIBOR mortgage rates are ending
LIBOR is being discontinued as a benchmark for interest rates. This is a legislative change that all mortgage lenders are working to implement. In line with this, we'll stop using it to calculate the interest rates of any of our mortgages.
What is LIBOR?
LIBOR is the London Interbank Offered Rate. It's the rate at which major banks can borrow from one another.
Banks and building societies sometimes use LIBOR as a benchmark for determining interest rates on loans such as mortgages. The interest rates of some of our mortgages are calculated using LIBOR.
The Financial Conduct Authority (FCA) no longer considers this to be a robust or sustainable reference rate. Following an industry review, legislative and regulatory changes are being made to discontinue LIBOR. Financial institutions must now move impacted customers to an alternative reference rate by 31 December 2021.
We'll stop using LIBOR on 1 September 2021. On that date, we'll change the reference rate on the LIBOR-linked part of your mortgage to the Bank of England Base Rate. So you'll still be on a tracker mortgage, just with a different reference rate.
We'll make sure you don't suffer any financial detriment as a result of this, in that your new interest rate will be no higher than if your mortgage had remained on LIBOR.
What happens next?
Before the changes take effect, we'll write to you to explain what's happening and what it means for you.
From 1 September 2021, the Bank of England Base Rate will replace LIBOR as your reference rate. You don't need to do anything, but you can get in touch to discuss other options if you'd like.
What is the Bank of England Base Rate?
Like LIBOR, the Bank of England Base Rate is a variable interest rate which increases or decreases based on changes in the wider economy.
The Bank of England Base Rate is the rate of interest paid to commercial banks that hold money with the Bank of England. It's set by the Bank of England's Monetary Policy Committee, and is widely used by banks and building societies to determine their interest rates.
What happens if I'm in arrears?
Please contact us to discuss your options. We have dedicated teams based here in the UK who will chat through your situation, and ensure any solutions agreed are tailored to your individual needs.
You can call us on 0800 072 9739 to speak to one of our friendly and trained colleagues. We're available Monday to Friday 9am - 5pm, and Saturdays 9am - 12.30pm.
There's also helpful information available on our worried about your finances page, including many services where you can obtain free and impartial advice and help with money management and budgeting.
The mortgaged property (which may be your home) may be repossessed if you don't keep up repayments on your mortgage.