HSBC is poised to reduce its product transfer window from six to three months, following the trend set by other high street lending giants, which began last summer.
HSBC says it is because mortgage rates are no longer changing at the same speed as they were almost two years ago and a shorter window is more convenient for borrowers.
The reduction of the product transfer window is expected to take place from early March.
Some brokers believe lenders’ decisions to shrink product transfer windows indicates an increased appetite to go after more remortgage business this year.
Lenders began shrinking their product transfer windows from six months – a time frame set by the Mortgage Charter – to around 3-4 months from June last year.
Under the Mortgage Charter – a voluntary code launched in June 2023 designed to help borrowers cope with the rapid rises in interest rates at the time – lenders agreed to let their borrowers book their next fixed rate six months before their current deal expired.
How the housing landscape is set to shift
Sponsored by Halifax Intermediaries
In a more settled mortgage rate environment, lenders have begun to revert to their pre-2023 policies.
PT switching periods shrink
Santander began gradually reducing its product transfer window from six months to four months in June, completing the transition in August. At the time, the bank said it was because rates had stabilised and the Bank of England base rate was forecast to fall, which resulted in fewer eligible borrowers asking to book their next rate more than four months in advance.
Nationwide and Halifax made similar changes around the same period, while Barclays reduced its product transfer switching window to three months in September to match customer demand, the bank said.
HSBC has been talking to brokers about the upcoming change since mid-December and will update intermediaries closer to the time to allow them to manage their pipelines, Mortgage Solutions understands. A 90-day product transfer window will be introduced from early March.
A HSBC UK spokesperson said: “We are committed to supporting our customers through each step of the mortgage journey. When rates were rising rapidly in 2022, HSBC UK, like… many other banks, increased the period in which customers approaching the end of their fixed rate could agree a new deal, enabling them to secure a lower rate earlier. Now rates are no longer changing at the same speed, like others, we are reverting to a shorter lock-in window.
“A 90-day window provides customers with sufficient flexibility to secure the best deal for them while removing the inconvenience of having to repeatedly switch deals over an extended period.”
Sonya Matharu‑Coxill, adviser and founder of The Mortgage Atelier, said: “HSBC’s move is a reflection of the market now. This was always the norm for product transfer windows, but it got extended because of the volatile market. We’re not in that era now; it’s more stable, [so] it makes sense to go back to some normality.”
Rowan Frayling, however, thinks the decisions are down to a shift of focus from lenders, who are now keener to go after remortgage business than existing customers.
According to UK Finance, there are 1.8 million fixed rate deals due to expire in 2025, offering lenders plenty of opportunity to grow market share.
“I think we’ll see more remortgaging that product transfers going forward,” said Frayling.
Whether to remortgage or product transfer had been coined “the topic of the year” by brokers interviewed by Mortgage Solutions in the final quarter of 2024.
“We’ve seen more lenders shrink their product transfer windows from six months down to three or four months. They say it’s because rates are more stable now, so there’s no need for such a long window. But I think it’s because they want to focus on new business rather than existing. They think that the product transfer business will look after itself,” he said.
Frayling said he expected to get more remortgage enquiries because, increasingly, homeowners wanted to increase their mortgage term to make their payments more affordable, carry out debt consolidation, or raise money for improvements rather than move, none of which can be done under a product transfer.
