LIBOR
IVR
– LIBOR Rate Change
LIBOR
stands for “London Inter Bank Offered Rate”.
This is the rate at which banks in the City of
London
are prepared to lend money to each other.
The LIBOR rate fluctuates daily and is determined by conditions in the London
Inter Bank Market.
The
increase in the LIBOR rate over recent months may be attributed to the
turbulence in the global current credit markets. This has been well reported in
the Press.
In
accordance with the terms and conditions of your loan, we have reset LIBOR.
As you know, the last LIBOR reset date was the 1 September when LIBOR
was reset to 5.75%.
Frequently
Asked Questions
1.
Why have my monthly mortgage payments gone up this month?
The
LIBOR rate decreased to 5.75% from 5.87% on 1 September 2008.
As a result, the interest rate applicable to your loan will decrease
accordingly (where the interest rate applicable to your loan is a variable
interest rate that tracks LIBOR). This
will affect payments due from the 1st of September onwards which will
increase to reflect the interest rate increase.
Your
monthly payments may not be affected if the interest rate applicable to your
loan is a fixed rate.
2.
Will the rate change next month?
Banks
and large financial institutions charge each other for borrowing money and the
rate fluctuates each day based on supply and demand of the wholesale money
markets.
Currently,
there are no plans to change the rate next month, but as we have said this is
dependent on factors outside of our control. What we can say is that you will
be notified in writing of any rate change in advance of it affecting your
monthly payment.
3.
My letter states a higher rate than LIBOR?
The
interest rate applicable to your loan is made up of the LIBOR rate (as reset
from time to time) plus a product margin.
Please refer to your mortgage offer or your credit agreement which will state
the applicable product margin.
4.
Why have my payments increased by such a large amount?
If
the interest rate applicable to your loan is a variable rate, then such
interest rate will increase in accordance with the increased LIBOR rate.
Your monthly payment will also increase to reflect this (please see
Q.1). However, your monthly
payments may have also have increased because you have come to the end of a
fixed or discounted rate. You will
need to refer to the mortgage offer documents or credit agreement for further
details.
5.
My offer documents state I have a certain number of fixed payments;
however my payments have increased - why is this?
The
offer document is an illustration and shows the number of payments that you
will make during the fixed rate period, on the assumption that your mortgage
starts on a certain day. If you did
not complete your loan on that day, the number of payments (and the amount of
such payment) may change. However
the date on which your fixed rate period expires will not change (and this date
will be set out in your mortgage offer or credit agreement).
6.
I am on a fixed rate but my payments have increased?
Your
interest rate may be fixed but your payments are not.
A payment change could be due to any or all of the following:
·
A retention being released
·
Changes in the repayment method
·
Fees that have been applied to the account
7.
The Bank of
England
Base rate has not changed but my interest rate has gone up?
Our
interest rates track the LIBOR rate and not the Bank of England base rate.
8.
My payments have increased and I can’t afford to meet the payments?
If
you’re having trouble making your mortgage repayments, please contact us as
soon as possible. While we cannot
advise you about your mortgage, we will consider your circumstances and may be
able to help with your situation. However
if you require any advice on your loan or financial situation, please speak to
the Citizens’ Advice Bureau or someone authorized to provide financial advice.
SPML
Collections
0845 602 3806
Preferred
Collections
0845 603 6227
The
following links may be useful if you are experiencing difficulties:
FSA
Fact Sheet
http://www.moneymadeclear.fsa.gov.uk/pdfs/mortgage_cantpay.pdf
National
Debt Line http://www.nationaldebtline.co.uk
Consumer
Credit Counselling Service http://www.cccs.co.uk