Interest rate change after application?

lindos90

What happens if a bank increases or decreases their mortgage rate after you have applied for a mortgage? Is it locked in to whatever it was on the date of the offer, or does the new rate get applied? Does it depend how far along the process you are?

RedFraggle

It depends. On a fixed rate mortgage it doesn't change (but you may be able to switch to a different mortgage product before completion). 
On a tracker (linked to BOE interest rate) it would change.
On a discounted or SVR product it would change IF the lender changed their SVR. 

lindos90

It's likely to be a 5 year fixed rate, but I was wondering if their rate dropped before buying, would they drop it, or would I be stuck on the rate it was when I applied. Sounds like it would be worth asking, if it happened. 
I wasn't taking as much notice of things last October when it all went belly up, but I know people had to pull out of purchases with the rate changes, and products were pulled and replaced with higher interest ones. Just curious (and probably over optimistic) that rates might go down again soon.

TheJP

lindos90 said:

It's likely to be a 5 year fixed rate, but I was wondering if their rate dropped before buying, would they drop it, or would I be stuck on the rate it was when I applied. Sounds like it would be worth asking, if it happened. 
I wasn't taking as much notice of things last October when it all went belly up, but I know people had to pull out of purchases with the rate changes, and products were pulled and replaced with higher interest ones. Just curious (and probably over optimistic) that rates might go down again soon.

It would stay the same as its a product they offer unless they withdraw the product. They aren't going to automatically give you a cheaper product if rates start to drop and the product is still available. You would need to re-apply for another product which may not be the full process as some lenders allow you to switch before you sign. If you have signed on the offer then whoopsie daisy. 

samkma

lindos90 said:

What happens if a bank increases or decreases their mortgage rate after you have applied for a mortgage? Is it locked in to whatever it was on the date of the offer, or does the new rate get applied? Does it depend how far along the process you are?

I just had my remortgage completed yesterday, the base rate changed during the offer was made but Barclays offered the same rate of 4.41% as initially offered. So hopefully yours will be honoured and in your quote.

lindos90

TheJP said:

lindos90 said:

It's likely to be a 5 year fixed rate, but I was wondering if their rate dropped before buying, would they drop it, or would I be stuck on the rate it was when I applied. Sounds like it would be worth asking, if it happened. 
I wasn't taking as much notice of things last October when it all went belly up, but I know people had to pull out of purchases with the rate changes, and products were pulled and replaced with higher interest ones. Just curious (and probably over optimistic) that rates might go down again soon.

It would stay the same as its a product they offer unless they withdraw the product. They aren't going to automatically give you a cheaper product if rates start to drop and the product is still available. You would need to re-apply for another product which may not be the full process as some lenders allow you to switch before you sign. If you have signed on the offer then whoopsie daisy. 

Just read that nationwide are lowering their interest rates, mortgage application appointment a week away so fingers crossed it will be done before application. Only had MIP up to now. With a 5 year fixed rate tracker it's worth locking into if there's a lower rate in the offing ! 

housebuyer143

samkma said:

lindos90 said:

What happens if a bank increases or decreases their mortgage rate after you have applied for a mortgage? Is it locked in to whatever it was on the date of the offer, or does the new rate get applied? Does it depend how far along the process you are?

I just had my remortgage completed yesterday, the base rate changed during the offer was made but Barclays offered the same rate of 4.41% as initially offered. So hopefully yours will be honoured and in your quote.

By the nature of a tracker, it will have gone up. They are honouring the rate you applied for, which is so much above base. 

kingstreet

I submitted a Nationwide app yesterday. Today the rate fell by 0.2%. I checked back in the app this morning and amended the product accordingly. If the rate had risen, I would have left it alone.

lindos90

kingstreet said:

I submitted a Nationwide app yesterday. Today the rate fell by 0.2%. I checked back in the app this morning and amended the product accordingly. If the rate had risen, I would have left it alone.

Absolutely! I remember when we've had a mortgage in the past, banks were always slow to apply their reduced rates, but much quicker at applying any increases! 
It's a good compromise though, they are willing to honour any reductions during application, but will not automatically apply any raises, and honour the rate it was when you applied. I guess a big increase might lead to products being pulled though. Fingers crossed, it all helps!

celly5460

lindos90 said:

What happens if a bank increases or decreases their mortgage rate after you have applied for a mortgage? Is it locked in to whatever it was on the date of the offer, or does the new rate get applied? Does it depend how far along the process you are?

Once you receive your mortgage offer, lenders usually allow you to amend the product as long as you have not drawn down on the funds. I'm in a chain and rates have fallen for the second time. The first time took 3 days to process via my broker. 

Chemistry777

Hi Lindos90, we had a 5 year fix offer from nationwide back in August 22.   We only completed last week and in that time 5 year fix rates were reduced twice.   I rang than and they said we could apply for the reduced fixed rate but this would involve cancellation of current offer with no guarantee of acceptance at new rate.  We did not have to do any new forms or anything.
We weren't borrowing too much so went  ahead anyway and on both times we we got text confirmation within an hour of acceptance at the new rate.

Glad for you that rates are continuing to fall but we are now locked in at the rate we completed last week.