Ten-year mortgage rates fall - time to fix for a long time?
There has never been a better time to get a 10-year fixed rate mortgage. Right now the market is heating up with a flurry of lenders putting out new products in this range.
Coventry Building Society has launched the cheapest ever 10-year fixed-rate deal with a rate of just 2.39%, although you will need a 50% deposit to qualify.
Rates appear to be falling across the market on these deals, which may be the result of the UK's decision to Brexit a couple of weeks ago.
In response to that vote, the Bank of England hinted that even more interest rate cuts may be needed to stimulate the economy, which should in turn mean cheaper borrowing for households.
What's on offer?
Today there are 142 10-year fixed rate mortgages to choose from according to financial information website Moneyfacts, so let's take a look at what's on offer.
The best 10-year fixed rate deals
Here are the best 10-year fixed rate deals on the market at the moment, where we've just looked at the most competitive rate for each LTV band.
Lender | LTV | Interest rate | Product fees |
50% | 2.39% | £999 | |
60% | 2.79% | £999 | |
65% | 2.49% | £999 | |
70% | 2.79% | £0 | |
75% | 2.99% | £0 | |
80% | 2.99% | £999 | |
85% | 3.75% | £199 | |
90% | 4.19% | £999 |
As you can see, although these best buy deals offer eye-catchingly low rates, many also carry hefty fees. So here are the best 10-year fixed-rate deals with fees under £500.
Lender | LTV | Interest rate | Product fees |
60% | 2.99% | £265 | |
65% | 2.79% | £0 | |
70% | 2.79% | £0 | |
75% | 2.99% | £0 | |
80% | 2.99% | £0 | |
85% | 3.75% | £199 | |
90% | 4.19% | £265 |
The pros and cons
A 10-year fixed-rate deal can offer peace of mind that your mortgage payments will be the same every month for the next decade.
Another advantage is that you won't have to go through the hassle of remortgaging that comes with shorter deals and will save on the costs associated with this.
However, locking into a 10-year deal means you might miss out on better rates later on if they continue to fall, which is likely following the UK's decision to leave the EU.
Experts reckon the Bank of England will cut the base rate to 0.25% this summer and it could fall even further to 0% before the end of the year. As we mentioned earlier, this will make it cheaper for banks to borrow and in turn may lead to even lower rates on things like mortgages.
You should also consider what's going to happen in 10 years. It's a very long time and your life is likely to change.
You might want to move home for example, which can be harder on these types of deals, unless they're portable. Also there are fees if you want to pay off your mortgage early.
Long-term fixes generally come with steep early repayment charges (ERCs), which is a percentage charged on the outstanding value of your loan when you redeem it before the end of the term.
Short-term vs long-term deals
Another important thing to remember is that you pay a premium for peace of mind as 10-year deals tend to be more expensive that shorter two- or five-year deals.
For example, HSBC is offering a two-year deal on a 65% LTV at 0.99% with a £1,499 fee. On a £200,000 mortgage taken out over 25 years this would mean monthly repayments of £489.35.
In contrast with the best 10-year mortgage at a 65% LTV, which you can get from Coventry Building Society, you get a rate of 2.49% which means you would pay £582.55 a month - which amounts to £93.20 more.
You will have to decide whether you're willing to pay for the extra peace of mind for long-term security.
Looking for a mortgage? Compare rates and fees at a glance
