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10-year fixed rate mortgage costs rise, would you lock in for the long term

After years of falling rates the 10-year fixed rate mortgage costs are beginning to rise according to research from Moneyfacts.



Research from Moneyfacts shows the 10-year fixed rate mortgage market has flourished in the last few years as the number of deals has increased from 8 in January 2014 to 124 in January 2017.

The rise in lenders offering these longer-term mortgages to first time buyers, home movers and remortgage buyers has seen interest cost reduce by 0.43% from 3.63% last year to 3.20% today.

With uncertainty over the negotiations for the UK leaving the EU, you may be worried about the impact on mortgage rates and a 10-year fixed rate mortgage would give certainty of payments in the future.

Growth in fixed rate mortgage market

According to moneyfacts the long-term mortgage market has been transformed by lenders with the number of 10-year fixed term deals rising dramatically as the following table shows:
Year starting
Average 10-year rate Mortgage deal numbers
Jan 2014  4.23 8
Jan 2015 4.17% 77
Jan 2016 3.63% 80
Jan 2017 3.20% 124
Charlotte Nelson, finance expert at Moneyfacts said lenders are trying to muscle in on this new area of competition causing the market to grow dramatically, and now means there is a great deal of choice for borrowers.

The number of deals offered by lenders is up from 80 last year to 124 available for 10-year fixed rate mortgages.

In addition, the cost of these mortgage have decreased significantly reducing by over 1% from 4.23% three years ago to 3.20% in 2017 and this compares to a 5-year deal of 2.92%.

For a small additional cost, over the 5-year fixed rate you could secure an additional five years of peace of mind to protect against future uncertainty.

Would you lock in for ten years?

If you are a first time buyer, home mover or remortgage buyer looking to secure your mortgage payments for the longest time possible there is a large choice of 10-year fixed rates on offer.

Rates have reached their lowest levels in 2017 although there is evidence the interest costs are rising from the record low of 3.11% in November 2016 to 3.20% today.

The 10-year fixed rate mortgage would give you the peace of mind allowing you to budget your expenses knowing that your payments would not rise during the term.

There would be more restrictions with such a long term. Lenders would expect you to stay with the deal for the full ten years and there would be expensive early redemption penalties if you exited the mortgage.

Even so, virtually all deals offer you portability should you move home although you may find you would need another mortgage if you buy a more expensive property.

There is significantly higher activity for lifetime mortgages with older equity release buyers accessing wealth in their property to help maintain their standard of living as costs rise.

What are your next steps?

Talk to our London City Mortgage brokers for advice if you remortgage your existing home and want the best mortgage deal or release capital, buying your first home, moving home or are a buy-to-let investor.

Learn more by using the equity release calculator, mortgage calculators, and property value tracker chart. Start with a free mortgage quote or call us and we can take your details.

For older homeowners releasing equity from your property, our LCM mortgage advisers can recommend the lifetime mortgage, accessing wealth to maintain your lifestyle or even give to a family member.

Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.

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