With all eyes on the Bank of England monetary policy committee this week – they meet on August 2 to decide if the base rate will stay the same or rise – the demand for five-year fixed-rate remortgages is growing.
Those longer fixed-rate deals now make up almost half of the UK’s lending market, but with uncertainty in the economy and money markets over Brexit in particular, some mortgage holders could be looking to fix their rate for 10 years.
More deals to choose from
According to Moneyfacts, there are now more long-term mortgage deals to choose from than ever before, with almost 140 on the market. Meanwhile, the average rate available on those fixed-rate, long-term deals has dropped.
That, however, would change instantly if the Bank of England does flick the switch on an interest rate rise on August 1 with lenders likely to respond immediately by raising the rates they charge on their loans.
Even with that potential rise, those with a large mortgage might consider it financially sound to fix their repayments for a much longer period, giving them the stability of knowing their repayments are set for the next decade and leaving them immune from any further interest rate rises in that time.
Competing to be cheapest
In July, Halifax and Lloyds each launched a 10-year fixed-rate product, and their rates are among the lowest in that part of the market, competing with Coventry Building Society and Barclays to be the cheapest.
Moneyfacts finance expert Charlotte Nelson said: “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. The 10-year fixed-rate mortgage market may be small, but the number of fixed-rate deals available is certainly increasing.
“Moneyfacts 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.”
Planning for long term
While it’s definitely too late to apply for a 10-year fixed-rate mortgage deal before August 2’s Bank of England meeting, there is still plenty of time to plan your finances for the longer term. And once you’ve decided on a new mortgage or remortgage, talk to the experts at Homeward Legal to get the essential conveyancing services you need to complete the deal.
We’re open seven days a week on 0800 038 6699 or you can get an instant, no-obligation quote here.