8th March 2016
Interest rates on ten-year fixed-rate mortgages have nearly halved since 2007, with the number of these long-term home loans on offer doubling in the same period.
However, typically these market-leading deals have only been available to those with a hefty stake in their property. But at last, there is some good news for borrowers as Leeds Building Society has this week launched the lowest ever 10-year fixed-rate mortgage, charging an interest rate of just 2.75 percent.
The mortgage is portable, has tapered early repayment charges and allows overpayments of up to 10% per year. It comes with a fixed £1,499 fee.
“Lenders are clearly targeting borrowers who are fearful of potential base rate rises, with the number of 10-year fixed rate deals available increasing,” says Charlotte Nelson, spokeswoman at Moneyfacts.co.uk
“This increase in choice is great news for borrowers who are looking for security.”
However, Nelson points out that while it is unlikely base rate will rise anytime soon, it will eventually, meaning taking out a 10-year deal is a gamble, particularly as rates across the overall mortgage market are currently so low.
The lender has also announced offers on fees assisted 10-year fixed-rates for those looking for higher loan-to-value home loans. For borrowers with a 25 percent deposit, a rate of 3.39 percent is available, while those with less equity of 15 and 20 percent can find rates of 3.89 percent and 3.49 percent respectively.
“Borrowers must also bear in mind that most 10-year mortgages require them to be tied to the deal for the full term, so it is vital that they weigh up whether they will need extra flexibility, such as being able to transfer the mortgage to another home,” says Ms Nelson.
“Failing to do so could mean borrowers end up paying a hefty early redemption penalty.”
She adds: “There is clearly a demand for longer-tem fixed rate mortgages, and with 10-year fixed rates cheaper than ever before, borrowers will have to weigh up the odds and assess whether the gamble will pay off.”