Arvest Bank LIBOR Transition

The financial industry is transitioning away from its standard benchmark index rate, the London Interbank Offered Rate (LIBOR), to an alternative rate index called the Secured Overnight Financing Rate (SOFR), effective June 30, 2023.

Frequently Asked Questions About the Transition from LIBOR to SOFR

What is LIBOR?

LIBOR (The London Inter-Bank Offered Rate) is the standard industry rate used as the basis of interest rates in a variety of financial contracts. The rate average is calculated based on the judgment of 17 panel banks, who submit an estimate of the rate that they would be charged if they were to borrow from another bank. 

What is SOFR?

SOFR (The Secured Overnight Financing Rate) is a reference rate established as an alternative to LIBOR. SOFR is calculated based on the actual costs of past transactions in the overnight repo market, limiting the predictive value on future rates.

Why is LIBOR going away?

While the LIBOR index has been the global standard utilized to calculate interest rates in a variety of financial contracts, such as mortgage loans, for several decades, it has become a less reliable benchmark over time due to changes in the financial industry. 

In the United States, an industry group called the Alternative Reference Rates Committee (ARRC), was established to select a replacement for USD LIBOR and help ensure a successful transition to the new index. The committee, convened by the Federal Reserve Board and the New York Fed, has formally recommended the SOFR as the new benchmark rate in the United States, which is expected to reduce volatility and increase transparency in pricing. 

What types of loans will this affect?

This change will affect some adjustable or variable-rate loans and lines of credit that rely on the LIBOR index, such as adjustable-rate mortgages (ARMs). 

ARM loans feature a fixed interest rate for a set period of time, then after that period ends, the interest rate adjusts periodically. When an adjustment is made, the new rate is calculated using an index and margin. While LIBOR has been the key index utilized to calculate such adjustments for several decades, it will be replaced by SOFR beginning June 30, 2023. Effective November 19, 2023, the SOFR Rates were renamed to “FTSE USD IBOR”.  Prior to this change the rates were titled “Refinitiv”.  This name/title change has no impact on how the indices are created or calculated. 

Will this affect me or my mortgage loan?

Effective June 30, 2023, if you have an ARM loan serviced by Arvest Bank that is tied to the LIBOR index, the next interest rate adjustment will be calculated utilizing the new SOFR index rate or other index alternatives, consistent with the terms of your loan. The full name and source of your replacement index will be provided in your next ARM Adjustment Notice. 

The replacement of LIBOR will not change other terms of your loan, such as the maximum interest rate you may pay during the term of the ARM or the timing of any interest rate resets. All rate and payment change notifications will continue to be sent out per state and federal regulations. 

What is the difference between SOFR and LIBOR?

SOFR rates are calculated differently than LIBOR rates. LIBOR relies on estimates provided by the panel banks and is an unsecured term rate. SOFR is a secured overnight rate, which provides more accuracy in determining the value of future rates by using a large number of actual transactions.

What do I need to do?

No action is needed on your part. You may refer to your monthly billing statement for the current interest rate on your ARM loan. All rate and payment change notifications will continue to be sent out per state and federal regulations.

Whom can I contact for more information?

If you have an ARM loan and have questions or concerns, please contact us. You may also access your account information 24 hours a day online at or by calling (800) 366-2132

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