Rates on 10-year fixed mortgages are on the rise from the record low seen at the start of this year, new research has revealed.
It comes as borrowers, concerned over speculation of more interest rate increases this year, are securing their mortgage repayments in longer term products.
Figures released by Moneyfacts.co.uk show the average rate of a 10-year fixed rate mortgage have crept up from a low of 2.96% at the start of February to 3.05% today.
According to experts at Moneyfacts, while borrowers attempt to safeguard themselves from interest rate hikes, lenders are adjusting prices in a bid to cope with the changing economy.
What’s more, Government lending schemes to mortgage providers are now coming to an end, meaning there is a time limit on how long lenders can prolong their lowest rates, Moneyfacts said.
Rachel Springall, finance expert at Moneyfacts, warned 10-year fixes are not without their dangers. “Borrowers need to feel pretty certain that their circumstances won’t change and that they will not need to amend their deal,” she said.
“This is due to the redemption charges that apply to most 10-year fixed mortgages, and they can be quite hefty. Borrowers may instead turn to five-year fixed mortgages, where they will find cheaper rates and are tied in for a shorter period.”
She added: “Whatever borrowers decide to do, they could benefit from working out the true cost of any deal. If it’s possible, they could take the low interest rate environment as an opportunity to overpay on their mortgage to raise the equity on their home and reduce the term of the loan.”
