SIX major lenders have increased the period of time existing customers have to lock in a new mortgage deal as interest rates rise.
Barclays, First Direct, HSBC, NatWest, Nationwide and Skipton have all extended the length of time in which borrowers can reserve a new rate.
Co-op Bank says it plans to make similar changes later this year, MoneySavingExpert.com reports.
Around 1.8million mortgage customers are on fixed deals which are set to finish at the end of this year, according to UK finance, and will find rates are higher now.
On September 27, the rate for a two year fixed mortgage was 4.78%, up from 2.38% last year, according to MoneyFacts.
The move by the six major lenders means mortgage customers can start their “product transfer” between four to six months before their current deal ends as opposed to traditionally three and under.
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This is different to re-mortgaging, which involves changing your lender.
If you don’t fix a mortgage deal before your current one ends, you will be put onto a standard variable rate, which are usually higher.
And fixing a mortgage deal at a lower rate before interest rates go up could see you save potentially thousands each year.
By extending their product transfer windows, the six lenders are allowing customers to fix deals earlier at lower interest rates than they are predicted to go up to.
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It comes as interest rates are predicted to hit 6% next year following Chancellor Kwasi Kwarteng’s mini-budget on October 6.
Sterling hit a record low against the dollar following the announcement, prompting the Bank of England to say it “won’t hesitate to change interest rates”.
And the Bank of England has already hiked the base rate to 2.25%, an increase of 0.5% from 1.75% before.
We have approached Clydesdale Bank, Halifax, Lloyds, Santander, Virgin Money, Yorkshire Bank and Yorkshire Building Society to see if they are looking to reduce their product transfer windows and will let you know when we’ve heard back.
Not all six lenders have upped their transfer windows by the same amount.
The full list is:
- Barclays – was 3 months, now 5 months
- First Direct – was 3 months, now 4 months
- HSBC – was 3 months, now 4 months
- Nationwide – was 5 months, now 6 months
- NatWest – was 4 months, now 6 months
- Skipton Building Society – was 4 months, now 6 months
Is it good news for mortgage owners?
Customers being able to fix a new mortgage deal earlier means they can lock in a rate which could be lower than what is predicted next year.
Nicholas Mendes, technical manager at John Charcol mortgage advisers, said increasing the product transfer window was “welcome news” for homeowners.
He said: “In a volatile market where rates can increase daily let alone waiting three months could be a costly mistake.
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“Increasing the window from 3 to 6 months has allowed great transparency for homeowners on their options on whether to re-mortgage to a new lender or stay where they are.
“This also allows homeowners to secure a rate earlier and avoid any further increasing in rates.”
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