Please note: Kent Reliance Property Loans administers existing mortgages and second charge loans, but doesn’t provide new mortgages.

Libor FAQs

You may be aware of the Financial Conduct Authority’s (the FCA) announcements that LIBOR would cease to be published in its then form from the end of 2021.

LIBOR stands for London Interbank Offered Rate and is a reference rate set independently of us by ICE Benchmark Administration Limited. You can find out more information about LIBOR at www.theice.com/iba/libor.

As a result of the changes to LIBOR we have replaced this as the basis for calculating the interest rate with a new reference rate if the interest rate you pay on your mortgage, or pay at the end of any fixed rate period, was linked to LIBOR.

Frequently asked questions

 

These frequently asked questions have been prepared to support you during the transition away from LIBOR as a reference rate. We may update these during the transition period and will publish any updates on our website.

The information below seeks to provide general guidance, the contents are not specific to your individual circumstances.

Further information is available from the Financial Conduct Authority and UK Finance websites.

If you have any questions please contact us on 0345 123 6302 and we’ll be happy to help.

The London Interbank Offered Rate (LIBOR) was, until 31st December 2021, an indication of the average rates at which banks could obtain unsecured funding, and for many years has been used globally as a key interest rate benchmark across a wide range of financial products, including mortgages

The aim of LIBOR was to measure the interest rate at which banks could borrow from one another. LIBOR relied on information about markets which is no longer be available from banks. Therefore, LIBOR is no longer considered sustainable and is being phased out.

The methodology for calculating LIBOR changed at the end of 2021.  Therefore all mortgage lenders have been working to switch mortgages to an alternative reference rate.

We’re replacing LIBOR with 3-Month Term SONIA (Term SONIA) plus 0.1193%.

We’ve chosen Term SONIA because it’s an interest rate benchmark that’s been developed as one of the alternative reference rates to replace LIBOR in some products. 

The adjustment of 0.1193% is needed to reflect the difference in the way LIBOR and Term SONIA work and to ensure the new rate performs in a similar way as LIBOR would’ve done over the term of your mortgage. This adjustment will be fixed at 0.1193% for the remaining term of your mortgage.

We consider this will be a fair replacement rate and it is the revised methodology that is being used to calculate LIBOR for a limited period after 31 December 2021.

SONIA stands for the Sterling Overnight Index Average. Term SONIA is publicly accessible and is calculated by an independent body, in this case ICE Benchmark Administration Limited.

You can find out more about how Term SONIA is calculated here: https://www.theice.com/iba/risk-free-rates#sonia.

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 to be higher than LIBOR would’ve been, or otherwise introduce inferior terms.

In addition, the FCA doesn’t expect mortgage lenders to be worse off as a result of replacing LIBOR with an alternative rate.

Because of the difference in the way LIBOR and Term SONIA work, to ensure the fair conversion of existing contracts, a small adjustment is needed to account for this difference. Further information about this adjustment (often referred to as a credit adjustment spread) is available on the Bank of England website:

https://www.bankofengland.co.uk/-/media/boe/files/markets/benchmarks/rfr/what-is-credit-adjustment-spread-supporting-slides.pdf

This reflects the revised methodology that is being used to calculate LIBOR for a limited period after 31 December 2021.

The adjustment we’ll apply to your mortgage is 0.1193%

We consider this fair because it reflects the average difference between 3-Month LIBOR and 3-Month Term SONIA over an historical five year period, has been calculated using an approach which has consensus and acceptance across the financial services industry and is the same adjustment which is being used in the calculation of LIBOR for a limited period after 31 December 2021. 

If you want to know more about how this adjustment is calculated, please see the explanatory documents on the Bank of England website:

https://www.bankofengland.co.uk/-/media/boe/files/markets/benchmarks/rfr/what-is-credit-adjustment-spread-supporting-slides.pdf

LRR  replaced LIBOR as the basis for calculating the interest rate you pay on your mortgage with effect from 1 January 2022.  Following the switch, the interest rate charged on your mortgage is LRR (which is 3-Month Term SONIA plus the adjustment of 0.1193%) plus the existing margin stated in your mortgage agreement.

A diagram showing how your interest rate will be calculated is below:


This is subject to any minimum interest rate (the interest rate ‘floor’), and/or any minimum rate for LIBOR and LRR as set out in your mortgage agreement.

LRR will be rounded up to two decimal places.

If you don’t want to accept LRR replacing LIBOR in the calculation of the interest rate on your mortgage you can repay your mortgage in full at any time or remortgage to another provider. 

If you’re considering one of these options, please contact us. We can provide you with a redemption statement that will explain the amount that needs to be repaid and any early repayment charges that may apply.

You may wish to get financial advice when deciding what is the best option for you.

The Money Helper website https://www.moneyhelper.org.uk/en provides free and impartial financial guidance that’s backed by the government, and has details of independent financial advisors should you wish to discuss the replacement of LIBOR and how this impacts you.  Alternatively, you can call them on 0800 138 7777 between 8am and 6pm, Monday to Friday.

The FCA has acknowledged that despite lenders’ efforts to replace LIBOR in mortgage contracts, there may be some cases where this won’t have happened before the end of 2021.

In 2021 the FCA consulted on a temporary solution for  the continued use of LIBOR based on a changed methodology – you may see this referred to as ‘Synthetic LIBOR’. It wasn’t clear until late in 2021 whether it would be possible to use Synthetic LIBOR to calculate the interest rate on your mortgage.  

The FCA have also made it clear that the use of Synthetic LIBOR is a time-limited solution, reviewed annually, so any switch to Synthetic LIBOR would only be temporary, so it’s likely your mortgage would still have needed to switch to an alternative rate in the future.

So we made this change with effect from 1 January 2022 to give you certainty about how the interest rate on your mortgage will be calculated beyond the end of 2021. 

We’ve replaced LIBOR with a reference rate that is calculated in the same way as Synthetic LIBOR is being calculated from 1st January 2022, so you shouldn’t be disadvantaged by this change.

We’ve not made any other changes to how and when we re-calculate the interest rate you pay, we’ll simply use LRR instead of LIBOR to make that calculation.

For example, if your mortgage agreement provides that the interest rate you pay will be a margin above LIBOR and recalculated quarterly based on the LIBOR rate on that day, we’ll continue to recalculate the interest rate you pay on those scheduled dates, but by adding the margin to the LRR on that day rather than the LIBOR rate on that day.

Your terms and conditions will explain how and when we recalculate the interest rate you pay and whether there’s any minimum interest rate (the interest rate ‘floor’), and/or any minimum rate for LIBOR which will apply to LRR.

The FCA has made it clear that LIBOR transition shouldn’t be used to move customers with LIBOR linked mortgages to replacement rates that are expected to be higher than what LIBOR would’ve been, or otherwise introduce inferior terms.

Like LIBOR, LRR is a variable rate, so we‘ll tell you about any changes to LRR and the impact on your monthly payments in the same way we would’ve done for changes to LIBOR.

We’ve replaced LIBOR with a reference rate that is calculated in the same way as LIBOR will be calculated for a limited period after 31 December 2021 and we expect LRR to perform in a similar way to LIBOR so you shouldn’t pay more over the term of your mortgage than you would’ve done had we not moved to LRR to calculate the interest rate you pay.

We’re unable to tell you exactly what the interest rate or monthly mortgage payment will be following the move to LRR until we first recalculate the interest rate you pay using LRR as, like LIBOR, LRR is a variable rate, so it’s likely to change before then.

We’ll write to you before your first payment based on LRR to tell you interest rate that will then apply and how this affects your monthly payment.

The amendments to your mortgage agreement took effect from 1 January 2022, but interest on your mortgage won’t begin to be calculated using LRR until your quarterly interest period ends for the first time in 2022. 

Let’s say that your current 3-Month LIBOR linked mortgage has the interest rate set every quarter on the 1 January, April, July and October and is based on LIBOR on the 15th of the preceding month. We’ve shown how this will work below:


Like LIBOR, LRR is a variable rate, so we’ll tell you about any changes to LRR and the impact on your monthly payments in the same way as we would’ve done for changes to LIBOR.

Fixed Rate Products

If you currently pay a fixed rate of interest then your interest rate won’t change until the end of the fixed period. At the end of the fixed rate period the variable interest rate which will apply to your mortgage will be based on LRR rather than LIBOR unless the fixed rate period ends before 31 March 2022, in which case the variable rate may initially be based on LIBOR until the first quarterly scheduled interest rate reset date after 1 January 2022.

No. You’ll continue to receive all communications as normal, the only change you’ll notice is these communications will refer to LRR instead of LIBOR.

When we refer to LRR in future communications this is calculated as explained fully in the Appendix 1 to the letter we sent telling you about this change.

You may receive some communications referencing LRR prior to your interest rate being recalculated using LRR for the reasons explained in question 12 above.

If you’re looking for more detailed information about LIBOR; the following links from industry bodies and organisations may be useful:

Financial Conduct Authority

UK Finance

Privacy Policy

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Terms & Conditions

There are some rules we need to explain so you know where you stand when you do business with us. You may also like to look at our privacy policy and cookies policy.

These rules are set out below: please make sure you read them carefully.

Kent Reliance Property Loans

Kent Reliance Property Loans is a trading name of OneSavings Bank plc. OneSavings Bank plc is a company registered in England and Wales (company number 7312896), whose registered office is Reliance House, Sun Pier, Chatham, Kent ME4 4ET. OneSavings Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (registered no. 530504).

In these terms and conditions when we use the words "we", "us" and similar expressions we are referring to OneSavings Bank plc.

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Please read these terms and conditions carefully.

When you use this website you are agreeing to and accepting these terms and conditions and any other terms and conditions posted on this website by OneSavings Bank plc from time to time. We may change these terms and conditions at any time, simply by updating this page. You should therefore check these terms and conditions regularly, as we will consider that your use of the site after any changes means that you accept the new terms and conditions.

These terms and conditions only cover your use of the site. Our products have their own terms and conditions. If the product terms and conditions are different from the site terms it is the product ones that apply.

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The information on this site is written for UK residents only.

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The website and information is provided "as is" and on an "as available" basis only and OneSavings Bank plc does not guarantee the accuracy, timeliness, completeness, performance or fitness for a particular purpose of the website or any of the information. No responsibility is accepted by or on behalf of OneSavings Bank plc for any errors, omissions, or inaccuracies in the information on the website.

Although OneSavings Bank plc attempts to ensure that the information contained in this website is accurate and up-to-date, we accept no liability for the results of any action taken on the basis of the information it contains and all implied warranties, including but not limited to the implied warranties of satisfactory quality, fitness for a particular purpose, non-infringement, compatibility, security and accuracy are excluded from these terms and conditions to the extent that they may be excluded as a matter of law. We do not attempt to exclude any rights you may have that we cannot exclude as a matter of law.

Except in respect of death or personal injury resulting from our negligence or in respect of fraud, none of OneSavings Bank plc, its directors, employees or other representatives will be liable for any loss or damage you suffer including, without limitation, indirect or consequential loss or damage, loss of revenue or profit (whether direct or indirect) or any loss or damage arising from loss of use or data, whether in contract, tort, negligence or otherwise, arising out of or in connection with the use of this website. However, this will not limit our responsibility for complying with any duty or liability which we have towards our customers under the regulatory system.

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About us

OneSavings Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is included on the FCA's register of authorised firms registered number 530504.

The FCA's register of authorised firms can be found at www.fca.org.uk/register.

The address of the FCA is 12 Endeavour Square, London, E20 1JN.

OneSavings Bank plc participates in the Financial Ombudsman Service (FOS). If you have a complaint about any aspect of our services, please see our leaflet How we'll put things right.

If you are not satisfied with our final response you may be able to refer your complaint to the FOS. If you would like more information about the FOS, please contact us.

Alternatively, visit their website: www.financial-ombudsman.org.uk or telephone them on 0800 023 4567.

*For customer service and training purposes, calls with OneSavings Bank plc may be monitored and/or recorded.

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Caronavirus (COVID-19) FAQs

I’m a mortgage customer and worried I won’t be able to make my repayments – what should I do?

If our mortgages customers are facing difficulty, we encourage them to get in touch as soon as possible. Kent Reliance Property Loans will support customers that are experiencing issues with their finances as a result of Covid-19, including a payment holiday of up to three months.

If you need any further assistance please contact us 03451 236303.

Homes for Ukraine

We support the government ‘Homes for Ukraine’ scheme and are working to help our customers participate in the scheme.

If you wish to participate and your application to be a sponsor is accepted then you must notify us. You should also inform your household insurance provider.

We also suggest you consider the financial implications of participating in the scheme and if you need further information or advice, we’d recommend you contact the Money Helper service:

Websitehttps://www.moneyhelper.org.uk

Telephone: 0800 138 7777  (Monday to Friday 8am to 6pm)

For more information on the ‘Homes for Ukraine’ scheme, visit https://homesforukraine.campaign.gov.uk where you’ll find a list of FAQs and details on how to register to be a sponsor.