Should our lender honour cheaper five-year mounted mortgage price we requested for 3 weeks in the past? DAVID HOLLINGWORTH replies

We are porting our mortgage over to a home we’re buying with no extra borrowing. We went through all the paperwork needed with no problem in January sticking with our current lender.

Our current fix is due to end shortly and we are coming off a rock-bottom five year fix of 1.24 per cent – I hadn’t fixed onto a new deal for the house we’re buying as rates looked to be coming down.

On Tuesday 3 March I saw the direction of travel with swap rates and interest rates thanks to the emerging conflict in the Middle East, so just wanted to lock into a five year fix there and then. I emailed our adviser with clear instructions.

I didn’t receive a response, so called the customer service desk on Wednesday 4 March. It said she would be in touch.

I received a response late on Thursday 5 March with the earliest appointment date of 19 March.

In the end, I was put in touch with another adviser, but not until 10 March and rates had gone up in between, I was told the rate is whatever the rate is on the day of the appointment. It’ll cost us roughly an extra £1,000 over the five years.

Should the lender honour the fix I wanted on Tuesday 3 March? What advice do you give when contacting them?

David Hollingworth replies: We’re in another extremely volatile period for mortgage rates. 

The ongoing conflict has put upward pressure on the rate of inflation, as oil and gas prices have risen. 

Higher inflation for a more prolonged period forces a rethink on where interest rates could be headed. 

As you identified, a spike in swap rates, a key indicator for fixed mortgage rates, has implications for mortgage rates and lenders have been forced to alter their rates several times in the last few weeks.

We’ve even seen lenders withdrawing rates without immediate replacement, as they struggle to keep up with the rapid shift in market rates. 

That sharp turnaround has resulted in borrowers rushing to secure a new deal before the rate increases.

So how can borrowers lock in a rate?

Generally, borrowers taking a new deal will lock in and secure the rate with a new lender once a full mortgage application has been made. 

In most cases the full application would need to be submitted, although there are some lenders where it’s possible for new customers to reserve a rate before they have completed the full application.

Submitting a decision in principle with some can be enough to reserve the rate for a period, allowing the full application to be made later. 

This can be a quick way to avoid losing a rate when deals are being pulled and changed.

What about existing borrowers?

The above is the typical approach for new customers. Existing customers will also often have the chance to secure a rate with their existing lender before the end of their current deal. 

Many lenders enable a rate switch to be selected several months in advance for a smooth shift and some will even enable an early move without penalty, for those that could take a lower rate.

That doesn’t apply here as you have the remainder of a super low five-year fixed rate. You clearly have a more complicated set of circumstances. 

There’s more going on and it sounds like you are still in your low existing rate, having so far only initiated the application to port the current mortgage to the new property.

Although you recognised that rates would start to climb, it’s not clear whether you had a recommendation that simply needed to be deployed. 

You may have only been advised by your lender on the approach to porting the mortgage, rather than discussing the specific rates and process for securing a new product when your deal ends. 

That may explain why an appointment was scheduled to discuss the options, although it wouldn’t have allowed you to be as quick as you’d like.

Making a complaint

To explore whether the lender will honour the rate that you wanted will likely require you to make a formal complaint. 

Whether that complaint stands a chance of being upheld will rely on the detail of how advanced your rate discussions had been.

If you had already been advised on the right product and told how to put that in place, you could be in a stronger position to claim that you should have been able to secure the rate there and then. 

Effectively your complaint would be that you were let down by poor service.

If the call was simply to initiate the conversation on a new rate for the porting deal, the lender may suggest that a more rigorous discussion to provide advice was needed. 

There may also be other process complications requiring additional workarounds because the porting application was already in progress. 

That could see them less inclined to agree to honour the rate.

Be clear about why you feel let down and how the service you received prevented you securing the desired rate, bearing in mind that rates are not guaranteed and can be withdrawn quickly.

The complaints process will often be detailed on the lender’s website. 

The lender will investigate and respond but if you are ultimately dissatisfied with the findings, you will still have the option to take the complaint to the Financial Ombudsman.

The outcome will be down to individual detail but don’t expect them to immediately agree to honour the rate unless there’s a very clear failure. 

Whatever the result you can hopefully take some comfort from the fact that rates have only continued to climb in the intervening weeks.