Last month, you read about whether mortgage rates in the UK might have peaked.
As inflation continues to fall, the likelihood of the Bank of England (BoE) raising interest rates further recedes. Consequently, several of the UK’s leading lenders have begun to reduce their mortgage rates in recent weeks.
Moneyfacts reports that Nationwide, the country’s second-biggest lender, has reduced the rate on some of its fixed-rate range by 0.55 percentage points while Santander reduced all its fixed rates by up to 0.39 percentage points in mid-August.
Falling rates are obviously great news if you’re looking to take out a new mortgage.
However, as lenders jostle for position in the market, they can often withdraw deals at short notice, potentially leaving you disappointed if you can’t take advantage of the deal you wanted.
So, read on to find out why 1 in 2 mortgage borrowers have been frustrated by a withdrawn deal, and how working with an expert can help you to save money.
1 in 2 UK adults have seen their mortgage product withdrawn
In periods where mortgage rates are changing quickly, lenders can often withdraw the deals they offer at short notice.
Indeed, Mortgage Strategy reports that half of UK adults who have applied for a mortgage in the last year have had their desired product withdrawn by their lender before they could secure it.
As a borrower, this can be incredibly frustrating. It may mean you have to take a more expensive product elsewhere, costing you hundreds or even thousands of pounds over the course of the deal.
On a £500,000 repayment mortgage over 25 years, even just missing out on a deal that is 0.25% cheaper than an alternative (5.5% rather than 5.25%) would cost you £74 a month, or almost £1,800 over the course of a two-year deal (figures from Altura mortgage calculator).
Working with an expert is a great way to navigate a market where lenders are withdrawing and repricing their deals at short notice. Here are three reasons why.
1. They can “book” a rate for you
In periods where interest rates are changing quickly, lenders often withdraw deals at very short notice – sometimes within a matter of hours.
This can be frustrating, as you suddenly find the product you wanted is no longer available.
Experienced brokers like Altura can help you to secure the mortgage rate you want by “reserving” deals on your behalf.
Lenders often give us limited advance notice of rate withdrawals and a short window in which we can “book” these deals. Consequently, we frequently work late into the evening on behalf of clients, submitting applications to lenders ahead of midnight deadlines to ensure our clients can take advantage of competitive deals before lenders withdraw them.
Working with an expert can be the difference between securing the deal you want and not – potentially saving you a significant amount over several years.
2. They can help you switch to a cheaper rate with your chosen lender if one becomes available
When rates are rising, you may want to “book” a deal to protect yourself against a lender withdrawing a product and then making it more expensive.
When rates are falling, the opposite is true. You may want to benefit from any reduction in the cost of borrowing.
This is an area where we can help. We’ll keep an eye on the relevant rates in the market in the weeks and months before your mortgage completes, and we can alert you if the lender launches a cheaper deal that might be more appropriate for you.
Often, this is a simple process as you will just need a new mortgage offer at the lower interest rate.
3. They can work with you in the months before you complete to secure the cheapest deal
One of the reasons that lenders are reducing the cost of mortgages in the current climate is because there is strong competition in the market.
Lenders are keen to boost their bottom line, so will often price their rates competitively to attract new business.
As an independent expert, we have access to thousands of deals from dozens of lenders. So, during the weeks and months before your mortgage completes, we can not only check to see if the lender you’ve applied to has a cheaper deal, but we may also find a better alternative elsewhere.
If there is enough time to apply, it can be beneficial to switch lenders later on, submit a new application, and secure a lower rate with a competitor. Over the term of the deal, this could result in significant savings.
Considering that many borrowers are now booking rates up to six months before their current rate expires – in remortgage cases – this approach could be very important at a time of falling rates.
Working with an expert means you always have someone watching the market, working in your interests to find the most appropriate deal for you.
Indeed, this is something we did for several clients who secured rates in the immediate aftermath of last autumn’s mini-Budget.
Get in touch
To find out how we can help you to secure a competitive deal in a volatile market, please get in touch.
Email [email protected] or call us on +44 (0) 20 3411 0079.
Please note
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.
