The interest rate linked to some of our customers’ mortgages is currently calculated with reference to the London Interbank Offered Rate (LIBOR), which is due to cease in its current format after 31 December 2021. Thereafter, we currently anticipate switching all our mortgages to track the Bank of England Base Rate (BBR) as the alternative reference rate. Should regulatory guidance change prior to the cessation of LIBOR in such a way to make it inappropriate to use BBR as the alternative reference rate, another alternative reference rate may be used.
We will continue to keep you informed:
Since May 2020, all new Foundation Home Loans products, including Product Transfer products, have been based on or revert to an interest rate which refers to Bank Base Rate (BBR).
LIBOR is the London Interbank Offer Rate which is the rate at which banks lend money to each other and is commonly used as a benchmark reference interest rate by which reversion rates on mortgages are calculated.
Globally, use of the interbank offer market, which IBORs including the London Interbank Offer Rate (LIBOR) reflect, has reduced since the financial crisis in 2008. Consequently, it no longer provides a sustainable transparent indication of lending rates. LIBOR is therefore no longer a suitable benchmark by which to set interest rates for mortgages. This decision has been made by the financial regulators and all banks, lenders and financial institutions will be moving their customers to an alternative reference rate.
If you currently have a Foundation Home Loans mortgage with an interest rate calculated referencing LIBOR, we will contact you closer to the time to inform you of:
If you have a mortgage that is not LIBOR linked, you do not need to transition.
The structure of your rate is shown on your mortgage offer. Some variable mortgages like Tracker mortgages reference LIBOR, and the reversion rate on some mortgages reference LIBOR.
If you are on a fixed rate, your initial rate will not be affected. Only the follow-on reversion rate will be impacted.
No. We no longer offer LIBOR referencing rates. All of our new mortgages refer to Bank Base Rate BBR.
You can read more about the transition from LIBOR at the websites of
The Financial Conduct Authority https://www.fca.org.uk/markets/libor