Big banks slash time to lock in new fastened charge mortgages – with one transferring from six months to simply three

Banks are reducing the amount of time customers have to secure a new mortgage rate ahead of their current deal ending.

Many banks allow existing mortgage customers to sign up to a new deal six months before their current one expires, and they can usually change it before the start date if a better rate comes up. 

This has been common since the mini-Budget in 2022, when rates became especially volatile – but now lenders are rowing back.  

NatWest became the latest bank to reduce its product transfer window this week, cutting it from six months to four.

A product transfer is when someone opts to stick with their current lender rather than remortgaging to a different lender. They simply move from one mortgage product to another product with the same lender. 

> What next for mortgage rates in 2024 – and how long should you fix for? 

Shifting back: A number of lenders have reduced the amount of time customers can lock in a new mortgage rate from six-months to three or four months

As well as NatWest, Halifax, Lloyds Bank, Santander and Nationwide Building Society have all reduced the window to four months this year. 

Barclays made the most dramatic cut in September slashing its product transfer lock in period from 180 days to just 90 days.

It represents a return to how things were in the past, with lenders reversing the longer periods and citing administration and funding costs as key reasons.

The six month period was brought in as part of the Mortgage Charter, a set of Government measures intended to help borrowers amid soaring rates. 

‘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,’ said David Hollingingworth, associate director at L&C Mortgages.

‘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. 

‘The Mortgage Charter also included the provision of being able to select a deal up to six months ahead.

‘Some lenders never moved to offering six month windows – for example, TSB and Yorkshire Building Society. 

Hollingworth added: ‘Now that rates have steadied there is likely to be less need for customers to lock in as early, so this shouldn’t cause any major issues for borrowers.

‘It will 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.’

It’s also worth pointing out that most mortgage offers are still valid for six months for those remortgaging to a different lender – rather than sticking with the same one.

Mark Harris, chief executive of mortgage broker SPF Private Clients added: ‘It is still possible for borrowers to obtain longer offer periods but it may be with a different lender and that means a full underwriting process will be required.

‘Also, be wary of any fees being paid upfront to secure a rate if you need to move to a different lender.

‘You will also need to be wary of your timescales should you need to change – either via a product transfer or need to move to a different lender – as it will take longer.’