What is LIBOR?

LIBOR is a rate of interest (the London Inter-Bank Offered Rate) which is often used as a benchmark for pricing financial products such as mortgages.

What is the Bank of England Base Rate?

It is the official Bank Rate set by the Bank of England and it influences the interest rates set by Banks, Building Societies and other financial institutions.

What is the reversion rate on my mortgage?

This is the interest rate that your mortgage will revert to at the end of your fixed rate period and is currently linked to LIBOR.

Why are we moving away from LIBOR?

The Bank of England and the Financial Conduct Authority have highlighted their concerns to financial institutions on the future stability of LIBOR and, the potential impact this may have on monthly interest payments paid by customers.

Why are we using the Bank of England Base Rate to replace LIBOR?

We are using the Bank of England Base Rate to replace LIBOR as it offers better stability on our customers’ future interest payments once their fixed rate period ends. The Monetary Policy Committee review the Bank of England Base Rate regularly and as such, the rates have remained relatively steady in recent years.

Will switching impact my monthly payments during my fixed rate period?

No, your monthly payment will remain unchanged until your fixed rate period expires.

Can I choose to remain on LIBOR when my fixed rate period ends?

You can choose to do nothing and remain with your mortgage reverting to LIBOR at the end of your fixed rate period. However, it is unlikely to track historical trends, therefore could distort the rate and there is no certainty as to what the rate may be. This could result in your monthly payments being higher than anticipated which could mean that you are unable to meet your payments to us.

What if I am still unsure of the implications of this change to my personal financial affairs?

You should seek independent advice from a financial advisor where required.

If you have any further questions, please speak your usual HTB contact. Alternatively you can find contact details here.