Adjustable-Rate Loans Changing In June

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Last updated on January 2nd, 2024

Changes for adjustable-rate loans are underway towards the end of June 2023. The changes could affect your current loan rates on things like mortgages, home equity lines of credit (HELOC), credit cards, and more. Here’s what you need to know about the upcoming expiration of the current index of interest rates.

Upcoming Changes For Adjustable-Rate Loans

Adjustable-rate loans get determined by the London Interbank Offered Rate a.k.a LIBOR. It’s an index of interest rates used in loans across the country and the globe. LIBOR sets the standard rates for adjustable loans in general. However, LIBOR is set to expire on June 30th of 2023. The standard rate for adjustable loans will no longer be set by LIBOR and will instead get replaced.

As mentioned, the widely used interest rate index affects various types of loans, including adjustable-rate mortgages, private student loans, HELOCs, and credit cards with interest rates based on LIBOR. Lenders will have to replace LIBOR with a similar index.

Many lenders for adjustable-rate mortgages and private student loans have already announced the new replacement. Many have switched to rates based on the Secured Overnight Financing Rate (SOFR). In contrast, lenders for HELOCs and credit cards have chosen the prime rate as a substitute. You will most likely receive a notice leading up to the set expiration date.

How The Change Affects You

According to Consumer Finance, your adjustable-rate loan will most likely see the most change from changing interest rates rather than a change to your loan’s index. In other words, the shift should be almost seamless. The new interest rate should be somewhat like its prior.

At times, lenders might also adjust margins to keep interest rates close to the same percentage. However, you may still encounter changes to your interest rates merely because adjustable-rate loans generally go up and down. The fluctuation in these loan rates occurs in conjunction with interest rate economic changes.

Although we haven’t reached the rate index’s upcoming expiration date, your adjustable loan lender may have already shifted to its replacement. Adjustable-rate mortgages, reverse mortgages, and private student loans will make the switch after June 30th, 2023. Also, note that LIBOR’s expiration does not affect Federal student loans.

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About: Jeannyn Gomez
Jeannyn Gomez

Jeannyn is the Content Management Assistant for In addition to serving on all aspects of social media and spreading the word on expert credit and personal finance advice, Jeannyn finds herself on quests for humor, supernatural phenomena, and conspiracy theories for fun.

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