The LIBOR rate change
The discontinuation of LIBOR and Molo – how does it affect you?
What is LIBOR and what’s happening to it?
LIBOR is the “London interbank offered rate”. It is a benchmark rate by which many lenders (including Molo) calculate the interest rates applicable to the loans they offer. It is in the process of being wound down, with the Financial Conduct Authority advising lenders to transition to alternative rates.
What does this mean for Molo mortgages?
To date, Molo has used LIBOR as the follow-on base rate for our mortgages, meaning it is used as a reference rate in our mortgage calculations and referenced in our documents.
In light of LIBOR being wound down and in response to guidance from the Financial Conduct Authority and the Bank of England, Molo is switching the reference rate on the mortgages we offer to the Bank of England base rate.
What does it mean for my Molo mortgage?
During your fixed rate period, there will be no changes to your interest rate.
After the end of any applicable fixed rate period, rather than your interest rate being calculated by reference to LIBOR, it will be calculated by reference to the Bank of England base rate. This means it will vary to reflect variations in the Bank of England base rate.
For example, if when you took your mortgage out the interest rate (after the end of any fixed rate period) was stated to be a % above LIBOR, from 15 December 2021 it will be that same % above the Bank of England base rate and will vary with changes in the Bank of England base rate, in the same way.
Can I speak to anyone regarding this?
Of course, get in touch with our team at info@molofinance.com, or use the live chat function on our site.