Is Now The Time To Fix Into A 10 Year Mortgage | moneyfacts.co.uk

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Derin Clark

Derin Clark

Online Reporter
Published: 19/10/2021

Mortgage rates are at their lowest level on record, but these rock-bottom rates are unlikely to last for long, especially with rumours that the Bank of England may increase base rate as early as this December.

For mortgage borrowers coming to the end of a fixed rate deal, or who are on their lender’s standard variable rate (SVR), it may make sense to take advantage of the competitive low rates and lock into a new fixed rate deal. Although many borrowers considering locking into a new fixed rate deal will be looking at two and five year fixed deals, mortgage borrowers may want to consider a 10 year fixed rate deal instead.

There are currently 178 fixed rate deals with a 10 year or more term available to mortgage borrowers. The lowest rate on a 10 year fixed rate deal is 1.94%, which is available from TSB to those moving home with a 40% deposit. The lowest 10 year fixed rate deal for those looking to remortgage and first-time buyers is 1.95% from Barclays Mortgage. This deal is available to those with 40% equity in their home or deposit and is also available to homeowners moving home. Those looking for a deal who own 25% equity in their home or deposit will find the lowest rate on a 10 year fixed deal is 2.24%, available from Skipton Building Society.

Although these rates are significantly higher than the lowest rates available on their two and five year counterparts, mortgage borrowers should consider that right now mortgage rates are at their lowest on record, and there is the possibility they will rise in the coming months and years.

Many factors can impact mortgage rates, but the Bank of England base rate can significantly influence the rates lenders set on their mortgage deals. The Bank of England base rate has remained at a historic low of 0.1% since March 2020, but rising inflation may prompt the Bank of England to increase base rate, with some suggesting that it will rise to 0.25% as early as this December and 0.5% by March. If this does happen and further increases to base rate are made, fixed rate mortgage deals may rise as a result. This means that, although locking into a 10 year fixed rate mortgage deal may seem like borrowers are paying a higher rate today, in five years’ time today’s 10 year fixed rates could be among the most competitive mortgage rates.

“For some borrowers a 10 year fixed rate deal could prove to be a good choice in the long-term, but borrowers should consider the pros and cons carefully before committing to such a long-term deal,” said Oliver Duck, from Mortgage Advice Bureau. “For example, borrowers should make sure that the 10 year deal allows homeowners to port the mortgage across to a new property in case they decide to move during the 10 years. Speaking to a mortgage broker may be a good idea for those considering a 10 year mortgage deal, as a broker will be able to highlight the advantages and disadvantages of these deals and whether they are the best option for the borrower’s needs.”

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