NatWest announces major mortgage change that will affect millions
by Levi Winchester · ChronicleLiveNatWest has joined the slew of banks shortening the window for borrowers to secure a mortgage rate before their current deal runs out. This critical period for locking in a new rate ahead of expiration is being trimmed from six months down to four, starting from December 1, as per advice on Martin Lewis' renowned MoneySavingExpert.com site.
The advisory cautions that this change gives customers less cushioning to "insure yourself against rates rising" as their existing mortgages come to an end. Following in the footsteps of Barclays, which curtailed its time frame from six months to three in September, other financial heavyweights like Halifax, Lloyds, Nationwide, and Santander have aligned their policy with NatWest's four-month period.
However, HSBC and Virgin Money stand out by sticking to the older six-month lead time.
Moneyfacts data shows average two-year fixed residential mortgages sitting at 5.53%, while longer-term five-year fixes average slightly lower at 5.28%. For those nearing the end of their mortgage agreements, it's a prudent move to start comparing rates immediately to scout out the most advantageous deals.
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Expert guidance from MoneySavingExpert recommends engaging a mortgage broker, who may offer access to exclusive options not readily available elsewhere. Homeowners are also encouraged to check in with their current lender for potentially competitive "product transfer" offers, reports the Mirror.
Before embarking on rate comparison, it's essential to gather detailed information about your existing mortgage - including the rate, terms, duration, any exit fees involved, and the loan-to-value ratio (LTV). With a comprehensive understanding of these factors, borrowers can more accurately assess alternative deals on the market.
If you're considering securing a new mortgage deal, it's crucial to check if you'd incur any fees should you decide to terminate your agreement later on, in case a cheaper option becomes available. Around 1.6 million fixed-rate mortgage deals are set to expire in 2024, which could result in higher monthly costs for these households due to the significant rise in rates over recent years.
When your fixed rate concludes, you'll transition onto your lender's standard variable rate (SVR), which is typically much pricier. There are numerous factors to consider when locking into a deal - such as the duration of the fix and the size of your remaining mortgage.
This follows the Bank of England's decision last month to reduce its base rate from 5% to 4.75%. The base rate impacts how much banks charge you when borrowing money, like when taking out a mortgage, as well as the return on your savings.
The base rate peaked at 5.25% in August 2023 and remained at this level until August 2024 when it was reduced to 5%. The Bank of England maintained the base rate at 5% during its September meeting.
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