Time to commit to a 10-year mortgage?

With the base rate on the rise, the time of record low mortgage rates appears to be truly at an end. Given the current uncertainty, it might be a good time to consider fixing your mortgage for 10 years, especially as there are now more such deals available to choose from.

10-year popularity

Indeed, the latest statistics from Moneyfactscompare.co.uk show that the number of 10-year fixed rate mortgage deals has increased by 35 compared to a year ago, with now 139 such deals to choose from. At the same time, the average rate available on these products has decreased, as can be seen in the table below.

Source: Moneyfactscompare.co.uk

"The improvement to the average 10-year fixed rate is in stark contrast to the rest of the mortgage market, with rates elsewhere slowly but surely rising," commented Moneyfactscompare.co.uk finance expert Charlotte Nelson. She suggested that this welcome movement is due to lenders wanting to attract borrowers revaluating their current deal, with many looking for long-term security.

Charlotte continued: "The 10-year fixed rate mortgage market may be small but the number of fixed rate deals available is certainly increasing … Moneyfactscompare.co.uk data also shows that this extra interest has seen a growing number of lenders enter the market, with the number of providers offering 10-year mortgages increasing from just eight two years ago to 14 today."

Compared to five-year fixed rate deals, 10-year mortgages not only provide longer security, but are also seeing more competition at the moment. As a result, "the gap between the average five-year fixed rate and 10-year fixed rate has decreased significantly, with the gap between these two deals now just 0.17% compared to a whopping 0.39% in July 2016," explained Charlotte.

10 years may not be for everyone

However, a 10-year deal won't be for everyone. Those on high loan-to-value (LTV) deals in particular may want to stay away from a decade-long commitment, as it would mean they wouldn't be able to remortgage to a lower-LTV deal in the meantime. Additionally, the rates at higher LTVs are significantly more steep, making it a less competitive option.

For those considering to make the jump, remember that 10-year fixed rate mortgages usually come with some pretty hefty redemption penalties, so you'll want to make sure that you can keep up with the repayments for the whole time and have truly found the most competitive product for you.

That said, Charlotte has found that "currently 87% of the 10-year fixed rate deals on the market offer some form of portability for those who wish to move home", meaning this possibility shouldn't hold you back – provided you've checked if your provider allows it.

"A 10-year fixed rate mortgage will need a lot of consideration… But perhaps now is the time to make a long-term commitment," concluded Charlotte.

What next?

Given the number of providers, it may be a bit harder to find 10-year mortgages to choose between, but our mortgage search tool should be able to help – and it allows you to compare these deals to five-year fixed rate mortgages as well as to each other.