Interest rates

First Charge Mortgages

Lender Managed Rate (LMR)

First Charge Mortgages offered from 21 January 2020.

Lender Managed Rate (LMR) is currently:

3.75%

Correct as of 10th November 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:

1.74%

Correct as of 14th September 2022

Please note that for customers on General Mortgage Conditions 2014 version 1.0 (amended 14th December 2021), LRR is set at 1.7371%. 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.

From 1st January 2022, LIBOR is no longer 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 was replaced with the Legacy Reference Rate for all customers who were offered a mortgage with Pepper Money before 21st January 2020.

We wrote to all customers who were affected by this change to explain how the Legacy Reference Rate replaced LIBOR and set out the changes made to your General Mortgage Conditions, effective from 14th December 2021. An amended version of the General Mortgage Conditions is available to view and download here. If you would like us to send you a paper copy of the amended general mortgage conditions, please contact us.

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 was 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. 

Interest rates

Second Charge Mortgages

Lender Base Rate (LBR)

Second Charge Mortgages Offered from 24 March 2021.

Lender Base Rate (LBR) is currently:

2.20%

Correct as of 1st November 2022

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:

2.25%

Correct as of 1st November 2022

If your mortgage offer was dated between 15 February 2016 and 24 March 2021, details about your interest rate can be found below and by reading the relevant sections of the General Mortgage Conditions booklet.

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 OBR 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.

From 1 January 2022, LIBOR is longer 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

We replaced 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.

 Changes in SONIA may cause the OBR to increase or decrease, in which case your interest rate will increase or decrease accordingly.

In calculating SONIA and its effect on the OBR we 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.

1M Legacy Reference Rate (1M LRR)

Second Charge Mortgages Offered before 15 February 2016.

1M Legacy Reference Rate (1M LRR) is currently:

2.21%

Correct as of 1st November 2022

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.

From 1 January 2022, LIBOR is no longer 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

We replaced 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.

Changes in SONIA will cause 1M LLR to increase or decrease, in which case your interest rate will increase or decrease accordingly.

In calculating SONIA and its effect on 1M LLR we 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 interest rate, 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.

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