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As many may have predicted, there's been an increase in the number of mortgage borrowers seeking out five-year fixed rate mortgages since the base rate increase on 2 August. This is borne out by Yorkshire Building Society, which reported a 13% increase in applications.
Given that the Bank of England has not ruled out more base rate rises in the near future, Janice Barber, mortgage manager at Yorkshire Building Society, said "the demand for longer-term fixes suggests mortgage holders expect interest rates to continue rising, and that by reviewing their accounts now they believe they may be able to get a better deal while rates are low."
Luckily for these people, the five-year fixed rate market has defied the general rate rise trend, with the average down slightly from 2.93% on 2 August to 2.92% today, according to Moneyfacts.co.uk data. While some loan-to-value (LTV) tiers have seen an increase, such as the 90% LTV tier, which has gone up by 0.04% to 3.23% on average, overall those borrowers who have been hesitating to remortgage or whose deals are only just ending can still benefit from decent fixed rates.
And it's not just five years of fixed repayments borrowers are interested in, as Janice reported that 10-year fixed mortgages are also proving popular. The main reason to opt for such a long-term mortgage deal is to ensure stability and peace of mind in what is likely to be a challenging time for the British economy. Whether you're comfortable signing up for a whole decade is up to your personal attitude and circumstances, and likely won't be right for everyone.
However, whatever your situation, now is an excellent time to review your mortgage deal and see if you can reduce your monthly repayments. If you've been paying off your mortgage for a few years now, remember that you might qualify for a mortgage with a lower LTV, and therefore likely a lower rate.
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