Homeowners looking to lock themselves into decade-long fixed-rate mortgages to protect themselves against economic uncertainty have seen the choice of deals available surge, analysis has found.
There are 150 options for 10-year fixed-rate deals on the market – nearly 10 times the number there were just five years ago – Moneyfacts.co.uk found.
Back in January 2014, there were just 16 deals on the market.
Such loans may be attractive to borrowers who want to to be sure about what their payments will be amid uncertainties over Brexit, the wider economy and potential future interest rate rises.
But they must also weigh up whether they are able to commit to a deal which will last for many years – or else they could potentially face hefty penalties.
The average loan rate has also fallen compared with five years ago.
In January 2014, the average 10-year fix had a rate of 4.61%, but now it is 3.05%.
The average 10-year fixed rate is slightly higher than it was in January 2018, when it stood at 3.02%. But at that time, there were only 89 deals on the market – compared with 150 now.
Darren Cook, a finance expert at Moneyfacts.co.uk, said: “In times of uncertainty, a decade-long fixed mortgage could be a safe haven for borrowers looking to secure their mortgage payments over the longer term.
“As consumers prepare themselves for another potential base rate rise this year, their thoughts will be on how to safeguard themselves from any increase in interest rates.
“Meanwhile, the availability of 10-year fixed rate products has increased by 134 over the past five years and the increase in competition as a result of this has seen the average rate fall from 4.61% to 3.05% during this period.”
Mr Cook said decade-long mortgages tend to have higher rates than shorter-term deals such as two and five-year fixed-rates, as lenders need to factor in longer-term fluctuations in market conditions.
He continued: “Borrowers must also be aware that 10-year fixed rate mortgages are often accompanied by hefty redemption penalties, which require a borrower to be tied into the deal for the full length of the term.
“However, currently 84% of the 10-year fixed rate deals on the market offer a porting option for those who wish to move home during this period, resuming the mortgage on the same terms with the new property.
“A 10-year fixed rate mortgage will need a lot of consideration, with borrowers looking at all the options to make sure this is the right choice for their individual circumstances.”
However, he said that for some people, given the current uncertainty, now could be the time to make a long-term commitment.