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’re replacing LIBOR with a reference rate that is calculated in the same way as we expect 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 at this time exactly what the interest rate or monthly mortgage payment will be when 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 apply and how this affects your monthly payment.