Fixing your mortgage rate for ten years is looking more attractive with plummeting rates and wider availability boosting their appeal amongst borrowers.
In the last five years these products, which lock you into the same rate for a decade regardless of Bank of England base rate rises, have seen their average rate fall from 4.61% to 3.05% today.
What’s more, back in January 2014 there were only 16 such mortgages on the market compared to the 150 which are available today.
According to Moneyfacts.co.uk, which has just released its analysis of this market, concerns the Bank of England might increase interest rates and other uncertainties in the market could make ten year deals a feasible option for borrowers looking for further security on their monthly payments.
Darren Cook, finance expert at Moneyfacts, 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.
“As customers prepare themselves for another potential base rate rise this year, their thoughts will be on how to safeguard themselves from any increase in interest rates.”
Watch out for…
There are some factors to consider before jumping into a ten-year fixed rate mortgage. Moneyfacts warned that although this longer-term market is becoming more competitive the rates are still typically higher than those charged for the more popular two and five-year fixed deals.
Ten-year deals also tend to come with hefty redemption penalties, said Moneyfacts, which mean the borrower is tied in for the full length of the term.
Fortunately, 84% of the 10-year deals on the market offer an option to ‘port’ the mortgage if they move house, this allows people to carrying on borrowing on the same terms in their new property.
Cook added: “A ten-year fixed rate mortgage will need a lot of consideration, with borrowers looking at all the options to make sure this is the right choice for their individual circumstances. But, perhaps, given the current uncertainty, now is the time to make a long-term commitment.”
