What are the changes to the FHBR? | moneyfacts.co.uk

nigel woollsey

Nigel Woollsey

Online Writer
Published: 25/03/2020

At a glance

  • FHBR stands for the Finance House Base Rate.
  • It was a popular way by which lenders and finance houses would set their own interest rates.
  • This method ended on 31 December 2019.

What is the Finance House Base Rate (FHBR)?

The Finance House Base Rate (more commonly referred to as the FHBR) was for many years in common use by UK lenders and finance houses who used it as an independent reference point to set their own interest rates for lending. This lending was usually for commercial lending contracts where rates could vary during the lending period.

Who sets the FHBR?

The FHBR was set by on a monthly basis by the Finance & Leasing Association (FLA), which determined the rate by calculating the average cost of three-month money in Sterling LIBOR (London Interbank Offered Rate) over the previous eight weeks. This was then rounded up to the next half-point. The rate would only ever change if the calculation resulted in a different number.

Why was there a FHBR?

The FHBR was widely used as it was considered more reliable and reactive to economic changes and fluctuations than either LIBOR and the Bank of England base rate.

When will the FHBR end?

It was announced by the FLA on 29 March 2019 that the FHBR would cease to be published on 31 December 2019. This decision was taken following the FLA’s decision not to become an authorised benchmark administrator, as would have been required by European Union regulations.
From 1 January 2020, the FLA has calculated and published mathematical adjustments to three-month Sterling LIBOR. Lenders affiliated to the biggest trade associations were advised to change to using the BoE Base Rate as a reference point.

Where can I find out more about FHBR?

More information about the now-defunct FHBR can be found on the Finance & Leasing Association’s website . Alternatively, you can take a look at our simple guide to asset finance.

If you've found this helpful why not take a look at some of our other business guides, including more info on commercial mortgages and bridging loans the essential things to know about invoice factoring and our business loans page.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

bank sign on building

At a glance

  • FHBR stands for the Finance House Base Rate.
  • It was a popular way by which lenders and finance houses would set their own interest rates.
  • This method ended on 31 December 2019.

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