Rate switch cancellations

Pretty simply a lot of rates were secured for people months ago when fixed rates were at their peak. Now that rates have come down significantly and a lot of these switches haven't happened yet, good brokers are looking after their clients and applying for new competitive rates instead to save their clients significant amounts of money each month in interest.

This is pretty common at the moment, especially for anyone that has applied in the last 2-3 months, as rates have continuously improved we can have a product transfer locked in and cancel it and re-apply nearer the time (with most lenders)

Maybe Natwests process for this is clunky, where others it is a really quick and easy thing to do

As part of the service I offer to my clients I will monitor the products available to them between sign-up and completion. There has been a steady reduction in fixed rates since the highs of October / November 2022 and I have looked to take advantage of new, cheaper, rates wherever possible for my clients. The process and ease of this process varies dramatically from lender to lender. NatWest and Halifax, for example, just require me to hit a button cancelling the existing application, HSBC require a call to their call centre and Nationwide require an email requesting the rate switch be cancelled. This all takes time out of our busy schedule, but is absolutely the right thing to do for our valued clients as mortgage rates reduce. Some clients have saved over £3,000 in interest charges as a result of us monitoring their rate switch options

Unfortunately this is the world we now live in , and from an advisers point of view this is great customer service and the best advice for our clients.

Lenders on the whole have extended their product switch periods to between 4-6 months which allows their customers to secure a new product early. With both interest rates and fixed rates rising before Christmas, clients were keen to secure the best rate possible. But with fixed rates dropping now , and lenders even offering variable rates below the Bank of England base rate it is best advice to revisit these clients and in some cases switch to another lender or even a better rate with their existing lender.

In simple terms the customer is king - and whats best for them, will always trump what is best for a lender.

The number of cancellations on rate switches will only grow over the coming weeks as lenders have embarked on a level of competition that, when coupled with the falling swaps we have seen over the last couple of months, has resulted in the release of rates that are consdirably lower than previously locked in PTs in the back end of last year.

Brokers are more diligent and have been hedging PT rates for clients 6 months ahead of their end date where possible, to give the client some form of certainty. Now that rates have fallen since that point, it is best practice and financially the best advice to proceed on the new lower rates that are available as this could save clients thousands over the fixed period.

This highlights the benefit of using brokers over renegotiating direct with a bank as brokers continue to track rates.

Rate switch cancellations have become more common as rates on offer have fallen. This is tied in with the fact lenders have allowed borrowers to secure them at a much earlier date, up to 6 months prior to the end of their existing deal. Brokers should be constantly monitoring the market for their clients to assess whether a better deal is available during the period before completion. That said, at some point, borrowers do need to commit to a deal and progress. This trend is causing a significant increase in work load, both admin and compliance for brokers in the current market.

This is why brokers are worth their weight in gold at the moment, With rates dropping over the last few months, it is very likely our customers will be eligible for a lower rate than previously- it is just excellent customer service.
It is going to be very difficult for the lenders to manage their pipelines as there is no guarantees the mortgage is going to go through until the completion date.

This is becoming more and more common as rates reduce. When rates were volatile and on an upwards trend I was encouraging clients to lock in fixes as early as the lender would allow. This meant that some clients were 4 to 6 months ahead of their current deal ending and now that rates are reducing a good adviser should be constantly reviewing their clients rates to make sure that they are on the best deal possible by the time that they come to switch.

The consistent reduction of mortgage rates by lenders is expected to persist in the upcoming months, making it unsurprising that such a trend continues. As brokers, we recommend that borrowers review their mortgage six months before the product end date to secure a favourable rate. This approach enables borrowers and brokers to take advantage of any subsequent reductions in rates, as long as it is consistently reviewed. It's not uncommon for brokers to cancel a previously booked rate and apply for a lower one in case a better rate becomes available. I've successfully applied this practice with NatWest for purchase clients., and they will not be the last.

Reviewing rates and monitoring market changes is something a broker should do as standard. Its a premium service and USP for using a broker whose interests are aligned with the borrower. Going direct means you could potentially miss the opportunity for hundreds of pounds a month in savings. A 6 month window to book switches has seen dozens of our clients rates being reduced and having to be rebooked, and as many as 6 reductions before taking effect for some. Lenders therefore really need to be prepared for the knock on this has to their service as its an almost daily occurance. Borrowers (and brokers) should be aware several lenders rescore remortgage / purchase cases and could see a secure case rejected, so there are checks to do before accepting a lower a rate.

Any broker worth their salt will be doing this for the client now, and it's a classic example of why using a broker is invaluable.
Rates are on a downward trend but we've seen all too recently how quickly they can take a turn for the worse. Clients are wanting the peace of mind that their new deal has been secured as early as possible, protecting them from the possibility of it turning sour. We can then monitor the deals up to the point of no return, switching them again any time a more preferential product is released.

We have a few clients at the minute for whom we have cancelled/re-submitted rate switch applications at least 5 times in recent weeks. It's a tad frustrating for sure, but ultimately it's putting the client first and ensuring they have the best deal they can possibly get.