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Warning for Santander and Nationwide mortgage customers reducing new deal limits to four months

Two of the top ten mortgage lenders in the UK have reduced their product transfer limits for customers wanting to secure a new deal. Nationwide reduced to 4 months in May 2024 and Santander will reduce its limits to 4 months in June.

All of the other mortgage lenders in the UK have the same 6 month product transfer limits for existing customers being able to secure a new deal. This limit was introduced in June 2023 following the introduction of the ‘Mortgage Charter’ from the government to protect mortgage customers against rate volatility.

Our mortgage experts explain what these new product transfer limits mean for mortgage borrowers and the reason for the change.

Mortgage borrowers can currently secure or lock-in a new mortgage deal up to six months before their existing deal expires. This means that you can apply for a product transfer and reserve a mortgage rate six months before your current deal expires.

An example would be a mortgage borrower has a fixed mortgage that ends in December 2024, you can therefore secure a new mortgage deal (e.g. fixed or discount) in June 2024.

The ‘Mortgage Charter’ was introduced in June 2023 to help protect existing mortgage borrowers against interest rate volatility. Mortgage interest rates have been increasing consistently for the past 3 years which has caused massive financial pressure to existing mortgage borrowers coming to the end of a deal.

Some mortgage customers have seen their interest rates increase from as low as 1% to as much as 5% almost overnight. The huge jump in mortgage interest rates has caused many borrowers to struggle with managing their household bills in an already difficult cost of living crisis.

In an attempt to support mortgage borrowers, the government introduced a scheme to help them to secure a new lower rate and protect against further interest rate increases.

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The table below shows the new deal limits for several of the top mortgage lenders in the UK.

Mortgage lenderProduct transfer limitRules changed?
Barclays logo6 monthsNo change
Halifax logo6 monthsNo change
HSBC logo6 monthsNo change
Nationwide logo4 monthsChanged in May 2024
NatWest logo6 monthsNo change
Santander logo4 monthsChange in June 2024

Our experts suggest that the reason for Santander and Nationwide reducing its product transfer limits is ‘because of the current stability in mortgage interest rates’. The Bank of England base rate has held firm at 5.25% for several months in 2024 and is currently likely to go down rather than increase again.

Mortgage borrowers are less likely to want to or need to secure a new mortgage deal as much as six months in advance. Mortgage lenders are expecting more borrowers to shop around nearer the time that their existing mortgage deal ends.

Mortgage lenders will typically offer its existing customers a ‘product transfer’ before their current deal ends. This is usually a quicker and easier way to get a new mortgage deal rather than a new application with another lender.

Mortgage lenders are constantly changing and moving their mortgage deals, now more so than ever before. We wrote an article last week about ‘mortgage rates changing quicker in June 2024’ which means that lender rates are still constantly changing.

It’s often easier to apply for a ‘product transfer’ with your existing mortgage lender and you can usually do this as much as six months before your deal expires. You can start the process well in advance of your current deal ending which also means that you’ll avoid the extremely high lender ‘Standard Variable Rates’ (SVR).

Most mortgage lender Standard Variable rates are between 7% and 9% which is significantly higher than the average fixed rate which is between 4.5% and 5%.

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Here are our expert tips that you need to look out for when you’re reviewing or changing your mortgage deal, including:

  • Mortgage lender (admin) fees – does the new deal have an admin or upfront fee that will be payable to secure the new rate? You’re less likely to be able to change your mind if a better rate comes along if there are fees.
  • Cooling off period – will the new mortgage deal lock you in before the new deal actually starts (usually 14 days before)? Make sure that you check this so you know what to expect.
  • Taking out two deals by mistake – this is unlikely but it can happen that you take out one mortgage deal and then switch to another deal without cancelling the first deal. This can be a costly mistake as you’ll need to pay the early repayment charge for the first mortgage deal.

For more information or advice about this, you can contact one of our friendly team of mortgage experts on 0800 009 6559 or CLICK HERE.

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How do mortgages work?

A mortgage is a financial agreement between a mortgage borrower and a mortgage lender, commonly a Bank or a Building Society. When you take out a mortgage, you are borrowing money which you have agreed to pay back within a set number of years (your mortgage term).

The way that you repay your mortgage will depend on the type of mortgage that you choose:

  • Repayment mortgage: You will repay your outstanding mortgage balance plus any interest in regular instalments (usually monthly).
  • Interest-only mortgage: You will only repay the interest for your mortgage during your mortgage term, and you will repay the full loan amount at the end of your mortgage.
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What is the UK mortgage rate today?

Currently, the Bank of England Base Rate (BBR) is 5.25% and it has been since August 2023. Most mortgage lenders will base their Standard Variable Rates on the UK’s base rate of interest, and these rates will usually be around 2% to 4% higher than the Bank of England rate.

Will mortgage rates go down in 2024 in the UK?

Mortgage rates in the UK are based on the Bank of England Base Rate (BBR), as well as other factors like inflation and any major economic events. Inflation has dropped to 2.3% in April 2024, and the Bank of England Base Rate has held steady at 5.25%.

This is promising news which could indicate the potential for lenders to reduce mortgage rates towards the end of 2024. While mortgage rates could drop, it is unlikely that they would fall anywhere below 4% until at least 2025/26. This is due to economic predictions that the Bank of England Base rate will remain at 3.5% or higher until mid-2025.

Should I fix for 2 or 5 years?

When applying for a fixed rate mortgage, you have the option of ‘fixing’ your interest rate for a set number of years. Common options for fixed rate mortgage terms include 2 years, 3 years, 5 years, and 10 years. The ‘right’ number of years to fix your mortgage for will be based on your situation and the level of flexibility that you need from your mortgage.

2-year fixed rate mortgages can provide more flexibility, allowing you to easily switch to a new deal if a better rate becomes available within the next 2 years. 5-year fixed-rate mortgages can provide more financial security, especially if average interest rates in the UK increase dramatically.

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