SIX major lenders have increased the length of time existing customers have to secure a new mortgage deal as interest rates rise.
Co-op Bank says it plans to make a similar change later this year.
about 1.8 million mortgage customers have fixed offers that will end at the end of this year, according to UK finance.
When they come looking for a new offer, they will find that the rates are higher than the last time they locked in their rate.
The average two-year fixed mortgage is now 4.78%, compared to 2.38% in the same period last year, according to MoneyFacts.
The move by the top six lenders means mortgage customers can start their “transfer products” four to six months before their current agreement ends instead of traditionally three or less.
This is different from remortgaging, which involves changing lenders.
If you don’t fix a mortgage deal before the current one is up, you’ll be assigned a standard variable rate, which is usually higher.
And arranging a mortgage deal at a lower rate before interest rates rise again could save thousands of pounds a year in payments.
By extending their product transfer windows, all six lenders allow customers to close deals sooner.
It means they can lock in a lower interest rate before they go back up.
The central bank has already raised the base rate seven times in a row, since last December and most recently raised it at 2.25%,
Lenders use the BoE rate to report the interest rates they offer customers on loans, credit cards and mortgages.
The full list of lenders that increase their transfer windows includes:
- 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 – was 4 months old, now 6 months old
Co-op Bank said it plans to move its window from four months to six, but did not confirm when it would make the change.
We also asked Halifax, Lloyds, Santander and the Yorkshire Building Society if they plan to increase product transfer windows.
A spokesman for Clydesdale Bank and Yorkshire Bank said its product transfer window has been six months for “several years”.
A Virgin Money spokesman said it does not plan to change its four-month window at this time.
Nicholas Mendes, technical manager at John Charcol Mortgage Advisors, said increasing the product transfer window was “good news” for homeowners.
He said: “In a volatile market where rates can rise daily let alone waiting three months could be a costly mistake.
“Increasing the window from three to six months has allowed for great transparency for homeowners about their options on whether to remortgage to a new lender or stay where they are.
“This also allows owners to lock in a rate sooner and avoid any additional rate increases.”
Barclays, Virgin Money, which owns Clydesdale Bank and Yorkshire Bank, HSBC, Nationwide, Co-op Bank and Santander said their remortgage windows would remain at six months.
How can I get the best mortgage rate?
There are a few ways you can get the best mortgage deal, if you know how.
Brokers, who act as intermediaries between the mortgage owner and the lender, can help you find the best deal by searching the market.
This can be useful if you need someone with specialized knowledge, for example if you are self-employed or have difficulty proving your income.
You can also use mortgage calculators: they allow you to compare the monthly cost of a mortgage based on the interest rate and the fees you will have to pay.
Or, you can use a comparison website to find market-wide deals based on your deposit level and whether you want a fixed or variable rate.
Either way, you should shop around for the best mortgage deals instead of going for the first one you see.