ARM Loan Update

Navigating the LIBOR Transition to SOFR

For our customers with an adjustable-rate mortgage loan previewsly tied to the LIBOR index used to determine the interest rate charged, please read the information below regarding the transition to the SOFR index.

What You Need to Know

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Icon for What You Need to Know
  • Because of regulatory concerns with manipulation of LIBOR, the industry has discontinued the use of LIBOR as a benchmark index and adopting more reliable indexes for new instruments.
  • The LIBOR index that is used to determine the interest rate charged for some adjustable-rate loans, was last published on June 30, 2023. The discontinuation of LIBOR affected some adjustable-rate mortgage (ARM) loans and lines of credit that previously used the LIBOR index to determine the interest rate.
  • If your adjustable-rate loan was based on the LIBOR index, a new index was or will be assigned to your loan at the next scheduled interest rate change date that occurred or occurs on your loan after June 30, 2023.
  • The President signed the Adjustable Interest Rate (LIBOR) Act (the “Act”) into law in March 2022. Under its terms, most of SouthState’s LIBOR based loans were transitioned to SOFR as provided by the Act and the final rule adopted by the Board of Governors of the Federal Reserve.
Frequently Asked Questions

Frequently Asked Questions

LIBOR (London Interbank Offered Rate) is a benchmark index used by banks to determine interest payments for financial products with variable or adjustable rates such as mortgage loans.

Regulators found discrepancies in the data used to compile LIBOR and determined that banks must use a more reliable index. Thus, LIBOR ceased for new instruments at the end of 2021 and is no longer available after June 30, 2023.

No. This transition occurred worldwide. Due to changes in the financial industry and the possible manipulation of LIBOR, there was a shift globally to move away from LIBOR to more reliable indices, such as SOFR.

Your ARM loan features an interest rate which is fixed for a period of time and then adjusts periodically to reflect a new interest rate. The interest rate for ARMs adjusts by using an index and a margin. The President signed the Adjustable Interest Rate (LIBOR) Act (the “Act”) into law in March 2022. Under its terms, SouthState’s LIBOR based loans were transitioned to SOFR as provided by the Act and the final rule adopted by the Board of Governors of the Federal Reserve. If the LIBOR index was used to determine the interest rate for your ARM loan, it was or will be replaced by the SOFR index pursuant to the term of the Act at the time of the most recent interest rate change date occurring after June 30, 2023. The other terms of your ARM loan, such as the maximum interest rate you may pay during the term of the ARM, or the timing of any interest rate adjustments, did not change.

The interest rate and the amount of your loan payment is based on the terms specified in the mortgage loan agreement you signed with us. When it’s time for the interest rate adjustment for your adjustable-rate loan, it will be based on the replacement index, which is now the SOFR index. The payment amount is based upon the SOFR index.

The replacement index we have selected for our mortgage loans previously using the LIBOR index is the SOFR index.

SOFR is a rate index which was selected by many lenders that is more firmly based on market transactions and is the index used in Adjustable Interest Rate (LIBOR) Act (the “Act”). In contrast to LIBOR, which previously determined rates based on opinions of panel banks, the SOFR index is based on a broad view of transactional data related to the cost of borrowing cash overnight through the repo markets in the U.S.

You may refer to your account statement for the current interest rate on your ARM. You may also find additional information regarding the transition from LIBOR to SOFR below:

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