Existing mortgage customers with many major banks get a six month period before their current mortgage expires to sign up to a new deal, but that is changing as banks shorten that window
Banks are reducing the length of the window mortgage customers have to secure a new rate before their current deal ends.
Existing mortgage customers with many major banks currently get a six month period before their current mortgage expires to sign up to a new deal, and they are usually allowed to change it up until the start date if a better rate comes along.
While this has been common practice for many banks since the mini-Budget in 2022 when rates became very volatile, lenders are now changing their tune.
Most recently, NatWest reduced the length of its product transfer window, reducing it from six months to four last week. Product transfer is an industry term referring to when a customer opts to stick with their current lender rather than remortgaging to a different lender, just moving to another product.
NatWest is just the latest lender to reduce the length of their product transfer window. Halifax, Lloyds Bank, Santander and Nationwide Building Society have all shortened the window to four months this year.
In September, Barclays went even further, axeing its product transfer period from from 180 days to just 90 days. Lenders have said admin and funding costs were the key reasons to reverting to the shorter windows seen pre-2022.
“Three to four months was the most common timeframe for an existing borrower to lock in a product transfer rate before interest rates began to climb steeply,” David Hollingworth, associate director at L&C Mortgages told thisismoney.co.uk
“As more borrowers started to shop around earlier in order to secure a rate sooner lenders responded by extending their windows for existing customers to select a deal in advance.”
Customers will not likely be needing to lock in their deals so far in advance no rates have steadied, he explained. He said the move would also help lenders with their pricing as when rates are falling customers will switch to a new, lower rate deal.
“That can cause rounds of additional work but also complicates the pricing of rates so a shorter window should help to give a more current view,” he added.