10-year mortgages garner attention amid economic uncertainty

Rising interest rates, soaring inflation, and increased energy bills may have forced consumers to consider 10-year fixed mortgages.

Unique Moneyfacts data has registered an increase in search volumes for 10-year fixed-rate mortgage products across our consumer website, which we believe may be a result of economic uncertainty.  

During February, 15.32% of mortgage searches on our website were attributed to second-time buyers and remortgage seekers registering an interest in 10-year fixed-rate products.

In contrast, this figure stood at 7.77% six months ago and 9.04% in January.

We believe this to reflect the current economic conditions. With interest rates on the rise and the increased cost of living not showing any signs of abating, consumers appear to be looking to protect themselves from future mortgage rate hikes.

Locking into a 10-year fixed-rate does provide a level of certainty, and this may be appealing in the current climate.

However, if you are considering a 10-year fixed-rate mortgage you should be aware of redemption penalties. In essence, these fees will apply if you decide to back out of your fixed-term agreement as a means of cover for the lender.

Some redemption fees can be as high as 8% of your outstanding mortgage balance, which will likely dissuade you from swapping providers for a better deal.  

While average two-year fixed mortgages have kept in tandem with the base rate hike last month, 10-year fixed rates have seen much more sluggish movement.

Since the beginning of February, the average 10-year fixed rate mortgage rate has increased 0.03%. In comparison, the average two-year fixed rate increased 0.26% during the same period.

This may indicate an increased level of competition in the 10-year fixed-rate market, with providers holding off rate increases to entice new customers.

However, our product choice for 10-year fixed-rates has dropped since the beginning of the year. We recorded a total of 173 products on the market on 1 January, which was an increase from the 128 recorded on the same date in September.

This number saw a brief increase to 180 on 1 February before dropping to 138 as of today.

Still, the 138 recorded today is up by four products since the beginning of the month. If the demand we have identified becomes tangible, we may well see this slight trend continue in an upwards direction.