- NatWest is the latest lender to reduce the time it takes for its customers to lock in a rate
Banks are reducing the amount of time customers have to get a new mortgage rate before their terms expire.
Many banks allow existing mortgage customers to sign up to a new contract six months before their current one expires, and they can change it before the start date if it increases. higher rate.
This has been common since the Budget in 2022, when rates were very volatile – but now lenders are coming back.
NatWest became the latest bank to reduce its yield transfer window this week, cutting it from six months to four.
Product switching is when someone chooses to stick with their current lender rather than mortgage to another lender. Simply move from one mortgage product to another with the same lender.
> What’s next for mortgage rates in 2024 – how long will it take for you to adjust?
Backlash: Many lenders have reduced the amount of time customers can lock in a new mortgage rate from six months to three to four months.
In addition to NatWest, Halifax, Lloyds Bank, Santander and Nationwide Building Society the window has been reduced to four months this year.
Barclays made the biggest cut in September when it slashed its yield transfer lock from 180 days to just 90 days.
It represents a return to the old ways, with lenders returning money over long periods of time and citing administrative and financial costs as key issues.
The six months were brought in as part of the mortgage freeze, a set of Government measures to help borrowers through rising rates.
‘Three to four months is the most common time for a current borrower to lock in an interest rate swap in advance interest rates started to go up,’ said David Hollingingworth, associate director at L&C Mortgages.
‘As many borrowers start buying homes earlier in order to get better rates lenders are responding quickly by extending their window for existing buyers to choose one work before.
‘The Mortgage Charter also includes the option to choose a job six months in advance.
‘Some lenders have not moved to offer a six-month window – for example, TSB and Yorkshire Building Society.
Hollingworth added: ‘Now that rates are stable, there may be less desire for buyers to close early, so it shouldn’t be a big issue for lenders.
‘It also helps lenders with their costs when rates fall and consumers switch to a new, cheaper job.
‘That could do some extra work but it would put pressure on rates so a shorter window would help with the current outlook.’
It should also be noted that most mortgage offers are still valid for six months for those remortgaging with another lender – rather than sticking to one.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: ‘Borrowers can still get longer terms but it may be with another lender, which means they will need a debt repayment method.
Also, be aware of the upfront fees to secure the rate if you want to move to another lender.
‘You also have to be careful when you have to switch – by switching products or moving to another lender – because it can take longer.’
