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Could mortgage porting work for you at a time of higher fixed rates?

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Written by: Shekina Tuahene
18/11/2022
As mortgage rates have risen and panic set in the market, some borrowers have looked to porting their mortgage as an alternative option.

An air of urgency and panic has been prevalent in the housing and mortgage market for some time.

The rush to benefit from the stamp duty holiday was replaced with speed to get a mortgage offer before costs rise further, and the desire to secure a relatively low rate has now taken precedence. 

And with mortgage pricing expected to increase more over the next year or so, some brokers predict there will be a surge in porting as people seek to hold on to favourable terms. 

Mortgage porting allows existing borrowers to keep their current deal or rate despite moving home. As the name suggests, you’re porting the deal from one home to the next. 

More porting activity 

A number of mortgage advisers are already seeing a greater interest in the ability to port a mortgage, including Mike Staton, director of Staton Mortgages. 

He said there was a “clear rise” in its popularity, adding: “I have already done two this month compared to the four I have done over the past 12 months. My other advisers are also experiencing the same. With the economic seas so stormy, more and more people are looking for a safe port.” 

Aaron Forster, director at Create Finance, also noted it was becoming a favoured feature “especially since the hike in interest rates”. 

He said: “It makes more sense for a lot of clients to port their current rate as this is likely to be significantly lower than what they would get if they moved their mortgage elsewhere. Why would someone want to move their mortgage where they may have a rate as low as 1%, onto a deal paying over 5%?”  

“Previously, clients would quite happily move their mortgage as this may have meant they could borrow more money or even get a better rate by moving the mortgage to another lender. This, for most people, simply isn’t the case anymore.  

“Until these clients come off the low rates that they have been used to you will find a large proportion of people will port their mortgage,” Forster added. 

Lewis Shaw, owner and mortgage broker at Riverside Mortgages, said he was also witnessing a rise. 

He said: “Sadly, I’ve had numerous ports to do over the last few weeks, and they’re often a nightmare for everyone involved.  

“However, with current rates where they are, we’ll see a huge rise in porting applications as it’s no longer financially viable to pay the early repayment charges (ERCs) when you’re potentially jumping up by two to four per cent on a mortgage rate.” 

Protection from rate rises 

Craig Fish, founder and director at Lodestone Mortgages and Protection, said he had recently completed two porting cases for the same client because they were selling their main residence and moving into the property they let. 

He said this was due to the “downturn in the housing market”. 

Fish added: “Being that their current rate is fixed until the end of 2025 at 1.34%, they have requested to take this mortgage with them. Because they are moving into a previously let property, and they have equity from the sale of their current residence, they are going to invest those funds into a new buy-to-let property and transfer their other buy-to-let mortgage across. 

“That rate is 2.05% until early next year. Needless to say, choosing new products was completely off the cards.” 

Justin Moy, managing director at EHF Mortgages, said: “Porting is perhaps the unexpected gift of rising interest rates. It allows those on longer-term deals arranged over the past few years to still benefit from those low rates, assuming their lender is happy to still support them.” 

He said although any additional borrowing would be on a current market rate, the blended rate could still be attractive.   

Moy said there was an increase in people wanting to learn about their porting facility but warned that it was “not a given right to port” as lenders still needed to check a borrower’s affordability. 

Mortgage porting isn’t always possible

Echoing Moy’s sentiments, brokers said that while borrowers may want to port their mortgage they needed to be aware it was not always be possible. 

Austyn Johnson, founder at Mortgages for Actors, said: “Porting has always been that under-explained part of a mortgage deal. What clients don’t usually understand is that this still entails a full mortgage application, credit and affordability check. 

“What you are saving is just the rate. What we have noticed is that the younger generation who bought and stretched their income to the max, when it’s time to port, they may have now had a child or one of them cut hours. This means that the affordability will suffer and with today’s stress tests, it can be hard to make it fit.” 

“If all the research is carried out first and it still fits, then yes, porting can work, but in my part of the industry, it’s rare. Most applications are for full purchase, remortgage and product transfer,” Johnson added. 

Making borrowers aware of mortgage porting options

Matthew Jackson, director at Mint FS, said porting was always a good option and something which should always be factored into mortgage advice. 

He said as it was no longer the better option to break a fixed rate to secure a lower one, more clients had porting in mind. 

He said this tended to be raised by clients who needed to move, rather than aspirational homeowners. 

Edward Checkley, managing director at Advias, said with rates being so low for so long, porting to retain the existing terms of a mortgage was appealing. 

He added: “Many borrowers may not be aware of the flexibility offered by their existing lenders. This could be, for example, exceeding the original loan to value (LTV) limits whilst maintaining the rate or reallocating the borrowing to interest-only. If these features were common knowledge, then many may give serious thought to porting rather than feeling trapped.” 

Related: Beat expensive fixed rate mortgages with these three alternatives.

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