Rate switch windows

I think rate switch windows are about right. Our policy is always to apply for a remortgage 6 months before the end of a clients fixed rate to secure a deal and then double check when the rate switch window opens if that is offering a better rate which it very rarely is these days. The advice stands that if your end date is coming, you need to start planning 6 months out because you are probably going to be paying more for your mortgage.

The window for a rate switch with most lenders used to be about 90 days, or three months. However, over the course of the last year we've seen many lenders extend this window to up to 6 months, which is very helpful in the current market as it allows clients to agree and lock-in a fixed rate now, thus avoiding any future rate rises and giving them peace of mind. Lenders have done this to protect their back book of business, with people concerned about rising rates many weren't willing to wait until just three months away from the end of their deal to act, many wanted to act sooner and their only option at that point was a full re-mortgage to a new lender. So, by extending their rate switch window lenders have been able to give people the choice of staying put with a new deal arranged, rather than them having to move away. It would be useful if all lenders had a six-month window, but it's the diversity in the market that allows it to flourish, so I wouldn't want to see lenders forced to change systems to comply with a forced six-month rule, if it meant that another innovation they wanted to bring to market was delayed or shelved.

The typical window of lenders offering a rate switch is circa 3-4 months before their current deal expires. With clients being able to secure a remortgage as early as 6 months before their deal expires and the concerns about rates rising more and more customers are looking to secure a new deal before their current lender will offer them a new rate. We've seen a handful of lenders look at offering existing customers a new rate 5-6 months earlier which is a great addition to have and more lenders will need to follow suit if they wish to retain their client bank to avoid clients remortgage to a new provider sooner. If more lenders follow suit, it would ease a lot of pressure on lenders who are experiencing poor service levels due to not being able to cope with the demand of new applications coming in. Our advice to all clients is to act in a timely manner, don't bury your head in the sand about sorting your mortgage and look at engaging with a broker 6 months before your current deal ends.

What is the typical rate switch window for lenders? This is usually 90 days before the end of the current mortgage product but I have seen lenders increasing this especially in the last few months. Have lenders been changing their rate switch windows? If so, why? Yes lenders have been making these rate switch windows longer up to 150 days. I think it's because they are aware that processing times are so high at the moment that leaving it just 3 prior to the rate ending is not long enough to get the application through in time and keep the customers off the variable rates. Should rate switch windows be extended to a uniform six months to reduce potential backlog? I think so, its just good practice in general to contact 6 months ahead, as a broker I couldn’t imagine only contacting 3 months ahead as this gives plenty of time for any delays and its always better to leave too much time rather than not enough. What advice do you give clients when remortgaging? If your broker hasn’t contacted you 6 months before your fixed rate is due to end then contact them and advise you would like to see what is available now as most mortgage offers are valid for 6 months anyway and its better to have the offer ready and waiting than pay heavy variable payments.

More and more lenders are extending their rate switch windows to make it easier for existing borrowers to lock in a new rate sooner. The maximum window most lenders will allow is 6 months and many are shorter. Borrowers are trying to lock in remortgage rates as soon as they possibly can since rates have been rising so rapidly, so if lenders what a chance of retaining existing customers they need to be around the 6 month mark to be in line with what a new lender would offer. To be in the best position possible borrowers should apply for the best rate available at the soonest possible window and then keep an eye on the market to see if things improve or get worse as they will have a rate locked in.