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Libor Transition

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Understand and prepare for changes to your adjustable-rate mortgage or other loans tied to the LIBOR Index. 

Changes to your adjustable-rate mortgage or other loan tied to the London Interbank Offered Rate (LIBOR) index will begin in June 2023. This information is being provided to help you prepare for the transition. 

The LIBOR index, used to determine the interest rate charged for some adjustable rate loans, will no longer be available after June 2023. This will affect some loans and lines of credit that use the LIBOR index to determine interest rate.

We're working with regulators and consumer advocacy organizations to move existing accounts from LIBOR to another index in a way that's fair and transparent.

Here's what this means for you:

  • If your adjustable-rate mortgage is based on the LIBOR index, a new index will be assigned to your loan at your first-rate adjustment after June 2023.
  • New adjustable-rate mortgages no longer use the LIBOR index. FNBT now uses the Secured Overnight Financing Rate term rates (TERM SOFR) for new loans booked. 

Frequently Asked Questions & Answers

The regulators that oversee LIBOR have stated that they can’t guarantee LIBOR will be available beyond June 2023, since the index is based on transactions that don’t occur as often as they did in previous years. Banks, financial institutions and governments across the globe have been working to identify options for replacing the  LIBOR Index.

An index based on SOFR will be used to determine the interest rate when your loan has its regular interest rate adjustment after June 2023. Your interest rate will continue to be based on the LIBOR index until then.

No. All loans and other financial products that are based on the LIBOR Indexd are affected.

We’re collaborating with other lenders, servicers, our regulators, our investors and consumer advocacy groups through the Alternative Reference Rates Committee (ARRC) to develop a transition plan to the SOFR index. 

The Alternative Reference Rates Comittee (ARRC) is a group of private market participants created by the Federal Reserve to help ensure a successful transition from LIBOR to a replacement index. Learn more at their website: Overlay.

No. New adjustable-rate mortgage (ARM) loans at FNBT will be based on the SOFR index. 

If the index is no longer available, the original loan documents (specifically the note), allow for the index of an adjustable rate mortgage to change.

A new mortgage is not necessary for the index change, however, it may be a good time to review your mortgage to make sure it still meets your financial needs. Consider getting a new mortgage If you can benefit from a lower interest rate, if your financial goals have changed,or you’re looking for a fixed payment.

No. Fixed-rate mortgages will not be directly impacted by the LIBOR index transition.

We want to ensure you stay informed during this transition, so FNBT will:

  • Post updated information to as it becomes available.
  • Mail information as the transition to the new index gets closer.
  • When your loan is updated to the SOFR index, we will send updates by mail and email to inform you of the new interest rate and payment effective dates.
If you’re experiencing financial difficulty, or are concerned about your ability to make payments, please contact us to assist you with options.

For most adjustable-rate mortgage loans, SOFR (Secured Overnight Financing Rate) is the recommended replacement rate by the Alternative Reference Rates Committee (ARRC). FNBT will inform you of all changes to your loan, including the replacement rate.

See the ARRC website: Overlay for more information on the discontinuation of the LIBOR Index,

After June 2023, the SOFR index will be used to determine the interest rate when your loan has its regular interest rate adjustment . Your interest rate will continue to be based on the LIBOR index until then.
All other details concerning your ARM loan will remain the same.

No. Your interest rate adjustment timing will not change.

With any ARM loan, the interest rate (and therefore payment) can increase whenever you have a scheduled interest rate adjustment. However, First National Bank and Trust, along with the Alternative Reference Rates Committee (ARRC) have made every effort to minimize the direct affect the change from LIBOR to SOFR will have on your payment.