Competition is fierce in the mortgage market at present, leading to a combination of falling rates and a noticeable increase in product choice. But, it isn't only the usual sectors that are seeing this kind of change, and instead, longer-term deals are starting to come into the foreground.
Research from Moneyfacts can reveal that there's one particular sector that's seeing a dramatic improvement in availability, with the number of 10-year fixed rate mortgage deals on the market continuing on a sharp upward trajectory.
Shorter term fixed rate mortgages have been the favoured option for borrowers for many years, but the historic low rates on offer in today's market means that fixing for longer periods is becoming an increasingly attractive possibility.
The chance to fix mortgage repayments at a record low rate for up to a decade appears to be too good an opportunity to pass up – particularly with the prospect of an increase to base rate on the cards – meaning borrowers are actively seeking these longer term deals. Providers are catching onto this consumer demand, which has led to the rise of the decade-long fixed rate.
The figures show just how quickly this sector is expanding. In January 2014, there were just eight 10-year deals for borrowers to choose from, but by October that number had risen to 22. Just three months later, the figure now stands at 77, meaning the sector is over five times larger than it was this time last year.
Along with an increase in choice, the interest rates being offered are falling, too. The average rate for a 10-year deal fell from 4.23% in January 2014 to just 4.17% today, the lowest rate ever recorded for this sector. The table below shows this in more detail.
|Number of 10-year fixed rate deals||15||8||22||77|
|Average 10-year fixed rate mortgage||4.58%||4.23%||4.98%||4.17%|
Sylvia Waycot, editor of Moneyfacts.co.uk, commented:
"The 10-year fixed rate bandwagon is racing down the road and lenders seem to be jumping all over it. This is great news for borrowers as they are able to fix their repayments for a decade at a time, which removes the fear of what happens if interest rates rise.
"Traditionally, the fear for those locked into a fixed rate has been 'what if interest rates drop?', which would mean they could miss out on cheaper deals. However, as Bank of England base rate is currently sitting at an historic low, and the only talk is of when it should rise rather than drop, this is less likely to be a concern for most people fixing."
The promise of a rate increase and the fear of rising mortgage payments as a result will mean many people could start contemplating a longer-term deal, and with rates at record lows and product choice increasing, there's never been a better time to consider it. Check out the best rates and see if you can keep your mortgage repayments low for a decade.
Sam: 8th Jan 2015 14:53:00
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