The cost of a ten-year fix is starting to rise after years of falling rates, according to research from financial website Moneyfacts.co.uk.
The average rate has started to rise slightly from a record low of 3.11% in November 2016 to 3.20% today.
Moneyfacts said this increase may be an indication of what is in store for long-term fixed rates in 2017.
The average 10-year fixed rate deal fell from 4.23% in January 2014 to 3.20% in January 2017.
Charlotte Nelson, finance expert at Moneyfacts.co.uk, said: “Even with the slight increase in the average rate, borrowers could find that a 10-year fixed mortgage gives them the peace of mind that their repayment will not change, no matter what happens. However, while we know rates cannot stay at these lows forever, we do not know when they will rise, or by how much.”
Fixed rate mortgages offer financial security to mortgage borrowers and can shield them from economic uncertainty.
The 10-year fixed rate market is also flourishing, with the number of deals going up from eight to 124 in the past three years.
Nelson said: “The 10-year fixed rate market has been improving for some time now, with lenders trying to muscle in on this new area of competition. This has caused this sector of the market to grow; for example, just three years ago there were only eight 10-year fixed rate products. Now, there are a staggering 124 deals to choose from. This is a great deal of choice for borrowers who are looking for the extra security a 10-year fixed rate gives.
“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 some flexibility in the decade ahead. Failing to do so could mean borrowers end up paying a hefty early redemption penalty.”
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