How a 10-minute call could cut £20k off mortgage bill

since the beginning of the year, the cost of fixed-rate mortgages has fallen.

Homebuyers applying for a mortgage can save thousands by asking their lender for a cheaper fixed rate.

Despite a new rate hike from the Bank of England, the cost of fixed-rate mortgages has been falling since the start of the year.

However, this is a detail that banks don’t have to share with you, even if you started your application in October last year, when rates rose above 6.5 percent.

A simple phone call to your bank can lower future monthly payments for tens of thousands of people and save thousands of dollars in interest, experts say — even if you only started the application last month.

For example, on Oct. 24, NatWest’s fixed rate for borrowers with a 15 per cent down payment on Oct. 24 was 6.39 per cent, costing £1,671 per month based on a £250,000 mortgage over 25 years.

On February 2, the equivalent rate for new borrowers was 4.58 per cent, giving them a payment of £1,401 per month. This move would save a borrower £16,200 in interest in just five years.

Adrian Anderson, director of mortgage broker Anderson Harris, says: ‘For the past 15 weeks, mortgage lenders have been slashing flat rates on new deals. That is a trend I expect to continue.

‘If you have a letter of offer for a mortgage from the past one to four months and you have not yet taken out the mortgage, call your bank. Then maybe you can switch to an equivalent, cheaper deal.’

Mr Anderson says he saved one customer £330 a month by converting their five-year flat rate of 5.24 per cent with HSBC, booked on 10 November and costing £1,965 a month.

Still awaiting completion, he went back to the bank and asked for a switch to 4.36 percent, the equivalent rate offered to new customers. This will save the borrower £19,800 in interest between now and 2028.

Ask your bank what rate it offers new customers for the same deal and if you can switch without voiding your mortgage offer, Mr. Anderson explains.

“It’s not guaranteed because banks have different rules,” he adds. “But it’s worth calling to avoid being stuck with a high rate unnecessarily.”

Last week, HSBC launched its first five-year deal under 4 pc. since early October, at 3.99 percent; and First Direct did the same yesterday. Meanwhile, Lloyds Bank and Virgin Money are also now offering 3.99 per cent for those who repair until 2033.

According to analyst Moneyfacts, the average five-year fix is ​​currently 5.08 percent, while ten-year deals are at 5.06 percent.

Decades long fixes are a relatively niche product. According to UK Finance, 22 percent of mortgages taken out in November were fixed for two years, 66 percent for five years and only 4 percent for more than five years.

Experts urge homeowners and buyers not to take ten-year deals, even though the rates offered are better than two-year and five-year fixes because they offer less long-term flexibility.

Andrew Montlake, of real estate agent Coreco, says: ‘When applying for a mortgage, consider your circumstances, such as how long you want to stay in a property.

You may be able to transfer a mortgage to another home, but this depends on your lender. I would never advise making a decision based solely on rates.’

There may be a greater variety of products in the future as lenders compete for customers, says David Hollingworth of mortgage broker L&C. He adds: “There will be more choice in the coming weeks as lenders continue to launch products below 4 percent.”

The cost for banks to borrow money to lend to homeowners — the “swap rate” — is currently higher for short-term loans than for long-term loans, so banks can offer better rates for longer-term products, Hollingworth says.

a.cooke@dailymail.co.uk