Goodbye record low rates – 10-year fixes climb back over 3%
Just three weeks ago 10-year fixed rate mortgages reached an all-time low level, falling below 3%.
But the good times didn’t last long, with decade-long deals already rising in price, according to Moneyfacts.
The financial information provider said that a year ago 10-year rates were 3.2% but they fell to the record low of 2.96% just a few weeks ago. However, in line with other price increases across the mortgage market, they have already tipped back over 3% to an average 3.05%.
Catch them while you can
This is still a very low rate, but it is creeping up, as lenders adjust their mortgage pricing due to speculation of an imminent interest rate rise.
Rachel Springall, finance expert at moneyfacts.co.uk, said: “In times of uncertainty, a decade-long fixed mortgage could be a safe-haven for borrowers looking to secure their mortgage payments over the longer-term.
“Lenders are appearing to retain competitiveness and variety over their 10-year fixed deals, to catch the eyes of consumers looking to remortgage or buy a home.
“However, it’s unavoidable that lenders will have to start pricing in fluctuations in long-term SWAP rates and start to adjust their range, in order to cope with the changing economy.”
Drawbacks to 10-year rates
Moneyfacts points out that taking out a decade-long fixed mortgage isn’t without its dangers, as borrowers need to feel confident that their circumstances won’t change and that they will not need to amend their deal.
This is due to the Early Repayment Charges that apply to most 10-year fixed mortgages, explained Springall, which can be hefty if you want to switch or repay your mortgage early.