Interest rates

First Charge Mortgages

Lender Managed Rate (LMR)

First Charge Mortgages offered from 21 January 2020.

Lender Managed Rate (LMR) is currently:

1.65%

As of 13th May 2022

The LMR or the Lender Managed Rate is a variable rate of interest that we set. The LMR may be used as the reference for setting the variable interest rate a mortgage switches to at the end of the initial product fixed rate period. 

Your interest rate will change in accordance with the terms of your mortgage offer and applicable General Mortgage Conditions.

You can access your General Mortgage Conditions which are available here.

Legacy Reference Rate (LRR)

First Charge Mortgages offered before 21 January 2020.

Legacy Reference Rate (LRR) is currently:

0.99%

As of 14th June2022

Please note that for customers on General Mortgage Conditions 2014 version 1.0 (amended 14th December 2021), LRR is set at 0.9863%. Please contact us on 03333 701 101 if you have any queries.

The Legacy Reference Rate is used to determine the interest rate applicable to mortgages offered before 21st January 2020 upon expiration of the fixed interest rate period. This rate will be introduced as a replacement rate for LIBOR from 14th December 2021. For more information see ‘How is the Legacy Reference Rate calculated?’ below.

Your interest rate will change in accordance with the terms of your mortgage offer and applicable General Mortgage Conditions.

You can access your General Mortgage Conditions which are available here.

LIBOR means the London Interbank Offer Rate. This is the rate of interest at which banks offer to lend money to one another on a short-term basis in the wholesale money markets in London. Each day a select panel of banks is required to submit the rate at which each could borrow funds from another. These submissions are compiled and used to calculate LIBOR.

When LIBOR changes, this may affect the rate at which a lender can borrow money, sometimes referred to as their ‘cost of funding’. LIBOR is therefore used by many lenders (including Pepper Money for some of our mortgages) as a reference for setting variable interest rates on mortgage loans and other financial products.

With effect from 1st January 2022, LIBOR will no longer be a valid reference rate for us to use when setting interest rates. For more information on the discontinuation of LIBOR, see https://www.fca.org.uk/consumers/mortgage-interest-rates-libor

From 14th December 2021, LIBOR will be replaced with the Legacy Reference Rate for all customers who were offered a mortgage with Pepper Money before 21st January 2020.

We have written to all customers who are affected by this change to explain how the Legacy Reference Rate will replace LIBOR and setting out the changes which will be made to your general mortgage conditions, effective from 14th December 2021. An amended version of the general mortgage conditions will be available to view and download from 14th November 2021 via www.pepper.money/tandcs. If you would like us to send you a paper copy of the amended general mortgage conditions, please contact us.

You will be able to view the latest Legacy Reference Rate from 14th December 2021.

If you have any queries about the Legacy Reference Rate, please contact us.

For customers who were offered a mortgage before 21st January 2020 only:

The Legacy Reference Rate is comprised of compounded SONIA over a period (SONIA is a reference rate administered by the Bank of England, meaning the Sterling Overnight Index Average) plus a “credit adjustment spread” (“CAS”). A CAS reduces the economic differences between LIBOR and SONIA, which result from, amongst other factors, the term credit risk premium that is built into LIBOR, but not into SONIA.  

The CAS will be set by us on 14th December 2021 (the date from which the Legacy Reference Rate will replace LIBOR) and will be the lower of: 

  1. the average of the daily difference between compounded SONIA and LIBOR over the preceding 5 years; and 
  2. the difference between compounded SONIA on 14th December 2021 and LIBOR on 14th December 2021.

This means that from 14th December 2021, and for the remainder of your mortgage, your interest rate is comprised of compounded SONIA and CAS (which, combined, are the Legacy Reference Rate), as well as any margin that was detailed in your mortgage offer. The CAS element of your interest rate will be set on 14th December 2021 and will not vary during the term of your mortgage. Similarly, the margin will remain as set out in our mortgage offer. The SONIA element (and thus your overall interest rate) will vary to reflect changes in SONIA on the terms of the updated general mortgage conditions. 

There are no other changes being made at this time.

Compounding SONIA is used as the floating index on our various externally provided funding structures. By moving to SONIA we are ensuring the reversionary rate of our products is being measured by the same index applied to our funding. This in turn reduces our interest rate risk and works to safeguard product pricing parity.

Our front book of assets is currently linked to compounding daily SONIA. By moving the back book of assets to the same underlying index we are maintaining consistency within the variable rate element of our product cohorts.

Interest rates

Second Charge Mortgages

Lender Base Rate (LBR)

Second Charge Mortgages Offered from 24 March 2021.

Lender Base Rate (LBR) is currently:

0.85%

You should read this together with the Second Charge Mortgage Offer sent to you prior to completion and our current General Mortgage Conditions which are available here. Other than during a Fixed Rate Period the Interest Rate will be a variable rate that is, or is linked to, Lender Base Rate (“LBR”) specified in the Offer and that we control. We may vary the Interest Rate by varying the LBR in accordance with the Offer and Condition 4 of the General Mortgage Conditions. We may reduce the LBR for any reason without giving you notice first. If we do not give you notice before the reduction we will do so as soon as possible afterwards, telling you when the change takes effect. As well as our rights under Condition 4.2 and the provisions of Condition 16.3 of the General Mortgage Conditions, we may increase the LBR to reflect any one or more of the following:

  • Changes to the cost of raising the finance to allow us to make loans. These costs will typically be linked to changes in the rate (or rates) used for lending by banks and other financial institutions to each other;
  • Changes in the Bank Rate of the Bank of England (or any successor to it);
  • Changes in our administrative or other costs in providing loans or running our lending business that are beyond our reasonable control; or
  • Changes in legal or regulatory requirements or guidance, or new decisions of the courts or Ombudsmen.

Any increase in the LBR will be proportionate to the reason(s) for the increase. On each occasion that the Interest Rate changes we will give you at least 7 days’ notice of the change. If we wish to change the Monthly Payment, we must first give you at least 14 days’ notice of the changed amount. The notice will say when you must start paying the changed amount. Please contact us if you require further details.

Optimum Base Rate (OBR)

Second Charge Mortgages Offered between 15 February 2016 and 23 March 2021.

Optimum Base Rate (OBR) is currently:

0.75%

If your Mortgage Offer was dated before 15 February 2016, please refer to your Loan Agreement or contact us for details.

Your interest rate will change in accordance with the terms of your Loan Agreement.

Please contact us if you require further information

LIBOR means the London Interbank Offered Rate. This is the rate of interest at which banks offer to lend money to one another on a short-term basis in the wholesale money markets in London. Each day a select panel of banks is required to submit the rate at which each could borrow funds from another. These submissions are compiled and used to calculate LIBOR.

When LIBOR changes, this may affect the rate at which a lender can borrow money, sometimes referred to as their ‘cost of funding’. LIBOR is therefore used by many lenders (including Optimum Credit for some of our mortgages) as a reference for setting variable interest rates on mortgage loans and other financial products.

With effect from 1 January 2022, LIBOR will no longer be a valid reference rate for us to use when setting interest rates. For more information on the discontinuation of LIBOR, see https://www.fca.org.uk/consumers/mortgage-interest-rates-libor

From 1 January 2022, we will replace LIBOR as a factor in determining our costs of funding with Sterling Overnight Index Average (“SONIA”) compounded over a period. SONIA is a reference rate administered by the Bank of England and reflects the average of the interest rates that banks pay to borrow Sterling overnight from other financial institutions or investors. You can find more information on SONIA at https://www.bankofengland.co.uk/markets/sonia-benchmark.

Consequently, just as to date, changes in LIBOR could have resulted in changes to the OBR, from 1 January 2022 changes in SONIA may cause the OBR to increase or decrease, in which case your interest rate would increase or decrease accordingly.

In calculating SONIA and its effect on the OBR we will apply what is known as a “credit adjustment spread”. This market-adopted mechanism reduces the economic differences between LIBOR and SONIA, which result from, amongst other factors, the term credit risk premium that is built into LIBOR, but not into SONIA.

You will continue to be provided with advance notice of any change to your monthly payment as a result of a change to the OBR, in accordance with the General Mortgage Conditions applicable to your mortgage.

If you have any questions, please contact our customer service team on 0333 014 3125.

There are no other changes being made at this time. 

Second Charge Mortgages Offered before 15 February 2016

If your Mortgage Offer was dated on or after 15th February 2016, details can be found below and by reading the relevant sections of the General Mortgage Conditions booklet.

If your Mortgage Offer was dated before 15th February 2016, please refer to your Loan Agreement or contact us for details.

You should read this together with the Second Charge Mortgage Offer sent to you prior to completion and our current General Mortgage Conditions which are available here.

Other than during a Fixed Rate Period the Interest Rate will be a variable rate that is, or is linked to, Optimum Base Rate (“OBR”) specified in the Offer and that we control. We may vary the Interest Rate by varying the OBR in accordance with the Offer and Condition 4 of the General Mortgage Conditions.

We may reduce the OBR for any reason without giving you notice first. If we do not give you notice before the reduction we will do so as soon as possible afterwards, telling you when the change takes effect.

As well as our rights under Condition 4.2 and the provisions of Condition 16.3 of the General Mortgage Conditions, we may increase the LBR to reflect any one or more of the following:

  • Changes to the cost of raising the finance to allow us to make loans. These costs will typically be linked to changes in the rate (or rates) used for lending by banks and other financial institutions to each other;
  • Changes in the Bank Rate of the Bank of England (or any successor to it);
  • Changes in our administrative or other costs in providing loans or running our lending business that are beyond our reasonable control; or
  • Changes in legal or regulatory requirements or guidance, or new decisions of the courts or Ombudsmen.

Any increase in the OBR will be proportionate to the reason(s) for the increase.

On each occasion that the Interest Rate changes we will give you at least 7 days’ notice of the change.

If we wish to change the Monthly Payment, we must first give you at least 14 days’ notice of the changed amount. The notice will say when you must start paying the changed amount.

Please contact us if you require further details.

LIBOR means the London Interbank Offered Rate. This is the rate of interest at which banks offer to lend money to one another on a short-term basis in the wholesale money markets in London. Each day a select panel of banks is required to submit the rate at which each could borrow funds from another. These submissions are compiled and used to calculate LIBOR.

When LIBOR changes, this may affect the rate at which a lender can borrow money, sometimes referred to as their ‘cost of funding’. LIBOR is therefore used by many lenders (including Pepper Money for some of our mortgages) as a reference for setting variable interest rates on mortgage loans and other financial products.

With effect from 1 January 2022, LIBOR will no longer be a valid reference rate for us to use when setting interest rates. For more information on the discontinuation of LIBOR, see https://www.fca.org.uk/consumers/mortgage-interest-rates-libor

From 1 January 2022, we will replace LIBOR as a factor in determining our costs of funding with Sterling Overnight Index Average (“SONIA”) compounded over a period. SONIA is a reference rate administered by the Bank of England and reflects the average of the interest rates that banks pay to borrow Sterling overnight from other financial institutions or investors. You can find more information on SONIA at https://www.bankofengland.co.uk/markets/sonia-benchmark.

Consequently, just as to date, changes in LIBOR could have resulted in changes to the OBR, from 1 January 2022 changes in SONIA may cause the OBR to increase or decrease, in which case your interest rate would increase or decrease accordingly.

In calculating SONIA and its effect on the OBR we will apply what is known as a “credit adjustment spread”. This market-adopted mechanism reduces the economic differences between LIBOR and SONIA, which result from, amongst other factors, the term credit risk premium that is built into LIBOR, but not into SONIA.

You will continue to be provided with advance notice of any change to your monthly payment as a result of a change to the OBR, in accordance with the General Mortgage Conditions applicable to your mortgage.

If you have any questions, please contact our customer service team on 0333 014 3125.

There are no other changes being made at this time. 

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About Pepper Money

Pepper Money is the brand name used globally by all Pepper Group companies to market consumer finance products. In the UK, Pepper Money offers a range of residential, buy to let, and second charge mortgages to borrowers.

Pepper Money is part of the Pepper Group, a diversified, global financial services business, whose senior management team is some of the most experienced in the UK mortgage industry having built a long-lasting reputation for creating innovative, flexible home loan products and services. 

Pepper money

UK Mortgage Lending Ltd (UKMLL) t/a Pepper Money is authorised and regulated by the Financial Conduct Authority (FCA) under registration number 710410 as a provider of regulated mortgages. The FCA does not regulate our Buy to Let mortgages. UKMLL is a member of the Finance and Leasing Association and follows its Lending Code as a provider of second charge regulated mortgages. Registered Office: 4 Capital Quarter, Tyndall Street, Cardiff, CF10 4BZ. Registered in England and Wales under Company Number 08698121.

Pepper Money Limited t/a Pepper Money is authorised and regulated by the Financial Conduct Authority under Firm Registration Number 811609 as a provider of regulated mortgages. The FCA does not regulate our Buy to Let mortgages. Registered Office: Harman House, 1 George Street, Uxbridge, London UB8 1QQ. Registered in England and Wales under Company Number 11279253. Calls may be monitored or recorded for training, compliance and evidential purposes.

Information

First Charge Service Levels

Intermediary - First Charge

Working on DIP referrals received on:

24th June

Responding to application portal broker messages on:

22nd June

Reviewing applications sent to our underwriters on:

23rd June

Working on applications received on:

22nd June

Currently reviewing valuations received on:

23rd June

Answering calls in less than (average speed):

< 1 Minutes
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