This section explains our transition away from LIBOR onto SBR. This only applies to some of our customers however, so please check below to see if this applies to you.
All new loans offered since 1st July 2020 have used SBR as their reference rate.
On 1st January 2021, existing buy-to-let and commercial investment loans that were advanced from Shawbrook Bank, transitioned from 3-month LIBOR to SBR. Please visit the Shawbrook Base Rate page for more details on the current rate and how it is calculated.
This transition does not apply to our Business Finance customers, or those customers whose loan was originally advanced from another lender. These loans will be transitioned during 2021 and affected customers will be communicated with in due course.
If the interest rate on your Loan is currently variable, you will not see an immediate change to your monthly payment amount. This is because a minimum LIBOR floor of 0.75% applies under the terms of your Loan and that floor will continue to apply now that we have moved your Loan to SBR. Your monthly payment will therefore only change if SBR exceeds 0.75%.
If the interest rate on your Loan is currently fixed, your payments will remain unchanged until the fixed rate period expires, and you move onto the variable rate. At this point the interest rate on your Loan will be calculated using SBR, rather than LIBOR. During this period, your monthly payments will only change when SBR changes, subject to the floor you have agreed in your Loan.
The UK financial services regulators, the Financial Conduct Authority and the Prudential Regulation Authority (Bank of England), require UK financial institutions to transition away from LIBOR no later than the end of 2021.
BBR is a policy tool used by the Bank of England to influence the economy and is representative of what it costs banks to lend. Sometimes however, there is a disconnect between BBR and Shawbrook’s cost of funds, therefore we have developed SBR to accommodate this. We do intend however to pass on any changes that occur in BBR, as long as it is representative of changes in the bank’s market funding costs.
As a result of changing the terms of your Loan to calculate the interest using SBR we have had to make certain related changes. These are set out in the Notice of Change you received from us.
You are unable to stay on LIBOR if your Offer Letter was issued on or after 28th February 2020. The terms of your Loan allow us to change the way we calculate the interest you pay.
If your Offer Letter was issued prior to 28th February 2020, then you had the right under the terms of your Loan to stay on 3-month LIBOR. If you told us by 18th December 2020 that you wanted to stay on LIBOR, your Loan has not been switched to SBR. However, if you have since changed your mind, then please contact us on 0345 848 0223.
There are multiple external sources of information which you may find useful, including the following:
You should also consider whether you wish to seek further guidance and independent advice from your professional advisors on the potential implications of this change including in relation to your financial, legal, accountancy or tax matters.
If you have any questions regarding any potential implications to your financial, legal, accountancy or tax matters, you should seek further guidance and independent advice from your professional advisors.