A mortgage expert said your bank won’t tell you, but taking action could save you thousands
You’re entitled to change(Image: Dusan Dinic via Getty Images)
Borrowers who have had a mortgage offered directly with their bank over the past month or so have been warned by an expert to do one important thing, or risk spending hundreds or even thousands of pounds unnecessarily. Since the war in the Middle East began, mortgage rates have shot up due to inflation concerns and the threat of higher interest rates.
People who have had a mortgage agreed in recent weeks will often now be paying a full 1% higher than they were at the end of February, if not more. When applied to a mortgage, that higher rate can mean hundreds or thousands of pounds extra over the course of even a two-year fixed rate period- and more still if the rate is fixed for five years.
Mortgage expert Bob Singh, founder of nationwide broker Chess Mortgages, said while the situation in the Middle East remained volatile, there was a growing sense that mortgage rates may have peaked.
Bob said: “This (past) week alone, we have had a number of major high street lenders, such as HSBC, Halifax, TSB and Santander reduce their rates, in some cases by quite chunky amounts. Though anything could happen when Trump is at the helm, there is cautious optimism that we may be past the peak for mortgage pricing.”
But Bob warned that if that’s the case and more better rates become available, people should not rely on their lender to tell them that there are now cheaper alternatives.
He said: “Borrowers think their lender will always tell them if a better mortgage rate has become available, but that this simply isn’t true. People too often see lenders, especially the high street brands they are very familiar with, as touchy-feely. But that’s simply not the case.
“Lenders are deeply commercial organisations and are out to make as much profit as they can, so why would they tell you that you could now switch to a cheaper rate in their range before you complete? The answer is, almost always, that they will not.”
Bob urged people to complete the check to see whether better rates have become available with their existing lender or, if they’d prefer, get a broker to do so on their behalf.
He continued: “If you’ve got a mortgage agreed and haven’t completed yet, keep an eye on your lender’s rates, because if a better one becomes available, as is very possible based on this week’s reductions, there’s every chance you could switch.
“Alternatively, get a broker to do it for you. A broker can also scour the whole of the market and see if there are better rates with another lender, as you can always switch to them.
“When rates are edging down and you’ve not completed yet, it pays to monitor the market right up until completion, or get a broker to do it for you. It can prevent you from squandering hundreds or even thousands of pounds.”