What Happens If Mortgage Rates Rise After You Receive a Mortgage Offer

TLDR

Mortgage offers usually lock in a borrower’s interest rate for a fixed period, typically between three and six months. If interest rates rise after the mortgage offer has been issued, the agreed rate usually remains unchanged during the validity period of the offer.

How Mortgage Offers Work

Once a mortgage application is approved, the lender issues a formal mortgage offer confirming:

• The loan amount
• The interest rate
• The mortgage term
• The offer validity period

During this validity period, the agreed interest rate usually remains unchanged even if market rates increase.

What Happens If Rates Rise After the Offer

If mortgage rates increase after the offer has been issued, the borrower normally keeps the original rate provided the mortgage completes before the offer expires. However, if the offer expires before completion, the borrower may need to reapply and could be offered a different interest rate.

Typical Mortgage Offer Validity

Policies vary between lenders.

Real Life Example

In one Limited company case we worked on, we had secured a mortgage offer that was initially valid for three months. However, the purchase involved a number of complexities and delays, meaning the transaction could not complete within the original timeframe.

Rather than allowing the offer to expire, we contacted the lender to explain the situation and explore possible options. Fortunately, the valuation report for the property remained valid for six months. Because of this, the lender agreed to extend the mortgage offer for a further three months.

Importantly, the extension was granted at the same interest rate that had been originally agreed. During this period, mortgage rates in the wider market had increased, which meant securing that extension made a significant difference for the client.

FAQs

1. Is my mortgage rate guaranteed after an offer is issued?

Usually yes, during the validity period.

2. Can lenders change my rate after issuing the offer?

This is uncommon unless the application details change.

3. What happens if my offer expires?

A new application or reassessment may be required.

4. How long do mortgage offers last?

Often around 3-6 months.

5. Can completion delays affect my offer?

Yes, delays beyond the validity period may require a new offer.

FCA Disclaimer

Your home may be repossessed if you do not keep up repayments on your mortgage.

This article is for general information only and does not constitute personalised financial advice.