LIBOR linked mortgage

malcolmfowler

A family member has a mortgage with Rooftop Mortgages. They have just written to her with a LIBOR transition letter explaining LIBOR is no longer operating and they would like to change to a replacement index called SONIA (Sterling Overnight Indexed Average) plus a further fixed rate known as CAS (credit adjustment spread).
They have asked her to sign a change to her mortgage contract. Later in the letter is the following paragraph...

We would like to hear back from you and encourage you to read this letter and the FAQ's carefully, if for whatever reason we do not hear back from you we will be in touch with you again to let you know about the next steps which will vary depending upon the terms of your mortgage.

There is no information about new rates or if this will affect her repayments.

Should she sign the acceptance paper?

DullGreyGuy

https://www.bankofengland.co.uk/-/media/boe/files/markets/benchmarks/rfr/what-is-credit-adjustment-spread-supporting-slides.pdf

The above set of slides from the BoE gives a fairly good explanation of what LIBOR was, what SONIA is and why an adjustment is required for credit risk that existed in LIBOR and doesn't in SONIA

malcolmfowler

Thank you. I have just read through that and it's fairly clear to me.