by Mark Johnston
The Return of the 10 year Fixed Rate Mortgage.
A 10 year fixed rate mortgage in this day and age can sound quite far-fetched, but imagine 5 years from now when rates may have possibly climbed to at least 6 per cent…..
It is not so far-fetched when looking back at the 1990s when many borrowers had mortgage rates of 9 per cent to 15 per cent.
A 10 year fixed mortgage rate product is a rare commodity within the current mortgage market.
The most recent lender to enter back in to the 10 year fixed rate mortgage market is Norwich and Peterborough building society, who have re-launched their 10 year fixed year mortgage which has a rate of just 3.99 per cent.
The mortgage has a 75 per cent loan to value ratio, it comes with a fee of just £295 and the building society is also offering free valuation or free legal fees. Those home owners looking to remortgage to this deal will be given a range of cash back options.
Richard Barker, product manager at Norwich and Peterborough building society, says “we know that this competitive rate will be welcome news for those who wish to fix for a longer period of time”.
David Hollingworth, director of mortgage broker London and Country, added “it is certainly a market leader in a sparsely populated sector of the market and will give long term security against rate rises”.
This particular deal is identical to an offer the building society had the same time last year, which was then pulled from the market after just two weeks following ‘unprecedented demand’.
The Leeds building society has also launched a 10 year fixed deal at a rate of 4.29 per cent and also has a 75 per cent loan to value.
This deal comes with a booking fee of £199 which is payable on application, which is non refundable, and a completion fee of £800 for loans up to £500,000.
A greater level of financial stability is one major reason to consider a 10 year fixed rate mortgage and it also ensures that the mortgage rate and repayments remain constant, even if a borrowers life changes in other ways.
Industry experts also state that by choosing a competitive longer term fixed rate borrowers will not be required to remortgage so often which can save on remortgage fees and charges.
These mortgage deals are better suited to those who feel they are in their ‘home for life’ and unlikely to move, although the deals are portable and so can be taken to a new property.
One of the downsizes to these mortgages is that an early repayment charge is applicable all the way through the term of the mortgage.
A lot can happen in 10 years and most people will not know what they will be doing in 2023 and it is also impossible to know what will happen to the economy. Therefore these deals are not for everyone.
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