Decade-long mortgage rates at record lows
Competition among mortgage lenders has fuelled the rise of ten-year fixed rate deals and driven down interest rates to a record low.
The average interest rate for a ten-year fixed rate mortgage now stands at 2.76 per cent, a fall of 0.32 per cent year-on-year from 3.08 per cent in November 2018, according to data from Moneyfacts.
The number of mortgage lenders offering decade-long fixed deals has reached 17, up from 13 more than a year ago and nine more than two years ago.
And there are now 158 deals for borrowers looking for long-term certainty to choose from compared to 101 in May 2018.
However, 108 products are only available on loan to values (LTV) of up to 75 per cent, while only two products are available at a maximum 95 per cent LTV.
Two-year and five-year markets saturated
Darren Cook, spokesman at Moneyfacts, said: “During a period of economic uncertainty, borrowers may be considering alternative ways to shield themselves against interest rate fluctuations and assure some stability in household expenses for the longer-term.
“A ten-year fixed rate mortgage is a large commitment, so potential borrowers need to feel confident that their circumstances are unlikely to change in the foreseeable future to benefit from the longer-term certainty that this product provides.”
Cook said the two and five-year fixed rate markets appeared to be nearing saturation, causing providers to look for new ways to attract mortgage business.
He added: “It appears that the ten-year fixed rate market may be geared towards the remortgage and second-time buyer market, as first-time buyers who step onto the housing ladder at 95 per cent LTV are likely to want to remortgage down a LTV tier or two to get better rates as soon as they are able, and a ten-year stretch may well be far too long.
“As with any mortgage, it is important that borrowers weigh up the overall true cost of any deal and make every attempt to overpay their mortgage to reduce the amount they owe – especially if they lock into a low rate.”