10-year fixed rates begin to rise
While we know rates cannot stay at these lows forever, we do not know when they will rise, or by how much.
The 10-year fixed rate is 'flourishing' with the number of available products rising from 80 in January 2016 to 124 this month.
But despite the average falling year-on-year, the average rate has started to rise slightly from a record low of 3.11% in November 2016 to 3.20% today, according to Moneyfacts data.
Moneyfacts says this increase may be an indication of what is in store for long-term fixed rates in 2017.
Charlotte Nelson, Finance Expert at Moneyfacts, said: “The 10-year fixed rate market has been improving for some time now, with lenders trying to muscle in on this new area of competition. This has caused this sector of the market to grow; for example, just three years ago there were only eight 10-year fixed rate products. Now, there are a staggering 124 deals to choose from. This is a great deal of choice for borrowers who are looking for the extra security a 10-year fixed rate gives.
“Even with the slight increase in the average rate, borrowers could find that a 10-year fixed mortgage gives them the peace of mind that their repayment will not change, no matter what happens. However, while we know rates cannot stay at these lows forever, we do not know when they will rise, or by how much.
“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 some flexibility in the decade ahead. Failing to do so could mean borrowers end up paying a hefty early redemption penalty. Thankfully, Moneyfacts data shows that all 10-year products currently available offer some form of portability for those who may wish to move home, although borrowers should be aware that affordability may need to be reassessed.
“Any borrowers considering this type of deal will need to puzzle through the maze and weigh up the odds to see if the gamble will eventually pay off.”