Take a chance on a 10-year fix
The number of 10-year fixed rate mortgages on the market has doubled in just one year to meet demand from borrowers sick of gambling on interest rates, according to figures from Moneyfacts.
The independent financial information provider said that many borrowers are looking for long-term mortgage repayment security to shield them from future, unpredictable rate rises.
As well as there being twice the number of 10-year deals available than this time last year (108 deals compared to just 55 last November), the interest rates have also fallen on these long-term fixed rates. Last year the average 10-year fix was 4.45% compared to just 3.54% today.
Charlotte Nelson, finance expert at Moneyfacts.co.uk, commented:
“Lenders are clearly targeting borrowers who are fearful of potential Base Rate rises, with the number of 10-year fixed rate deals available increasing by 96 in just two years. This increase in choice is great news for borrowers who are looking for security.
“Locking into a decade-long deal now will allow borrowers to rest assured that their monthly repayments will not go up until at least 2025, which could be seen as a wise move when Base Rate picks up from its historic low and mortgage rates follow suit, particularly as the average 10-year rate stands at just 3.54% today.
“Borrowers must also bear in mind that most 10-year mortgages require them to be tied to the deal for the full term, so it is vital that they weigh up whether they will need extra flexibility, such as being able to transfer the mortgage to another home. Failing to do so could mean borrowers end up paying a hefty early redemption penalty.
“There is clearly a demand for longer-tem fixed rate mortgages, and with 10-year fixed rates cheaper than ever before, borrowers will have to weigh up the odds and assess whether the gamble will pay off.”