NatWest confirms new mortgage rule coming into force within days

NatWest has revised its mortgage rate lock-in period, reducing the time from six months to four months as of December 1. This change means homeowners have less time to secure a new mortgage rate before their current deal ends, potentially leaving them exposed to rate increases.

The MoneySavingExpert.com website, founded by Martin Lewis, warns that this gives customers less opportunity to "insure yourself against rates rising" in advance of their existing mortgage expiry. Other lenders such as Barclays, Halifax, Lloyds Nationwide, and Santander have also shortened their lock-in periods to three or four months, while HSBC and Virgin Money maintain a six-month window.

The average two-year fixed residential mortgage rate currently stands at 5.53%, with the five-year fix averaging at 5.28%, according to Moneyfacts. Those nearing the end of their mortgage deals should start comparing rates now to explore available options.

MoneySavingExpert.com advises consulting a mortgage broker for access to deals not widely advertised. Additionally, it's recommended to discuss "product transfer" possibilities with your existing lender.

Before making comparisons, ensure you're informed about your current mortgage rate, terms, length, any exit fees, and your loan to value (LTV) ratio, reports the Mirror.

If you're considering securing a new mortgage deal, be sure to check if there are any fees you'd lose should you decide to terminate your agreement later on, in case a cheaper option becomes available. Around 1.6 million fixed-rate mortgage deals are set to expire in 2024, which could result in higher monthly costs for these households due to the significant rise in rates over recent years.

When your fixed rate concludes, you'll transition onto your lender's standard variable rate (SVR), which is typically much pricier. There are numerous factors to consider when locking into a deal - such as the length of time you want to fix for and the size of your remaining mortgage.

This follows the Bank of England's decision last month to reduce its base rate from 5% to 4.75%. The base rate impacts how much banks charge you when you borrow money, like when you take out a mortgage, as well as the return on your savings.

The base rate peaked at 5.25% in August 2023 and stayed at this level until August 2024 when it was reduced to 5%. The Bank of England held the base rate at 5% during its September meeting.