Mortgage blog: Why the time might be right for you to take a ten-year fixed rate

Posted 14 November 2014

Over the last couple of years interest rates have fallen to record lows. While two-year and five-year fixed rates remain the most popular, borrowers are increasingly looking to fix their mortgage for the long term as ten-year deals fall to ‘extraordinary’ lows.

Ten-year fixed rate deals are now available at below 4% although experts are warning that you should think carefully about committing to a long term product.

Demand for long-term deals results in good choice of cheap deals

One of the UK’s leading lenders has reacted to an increase in demand for long-term fixed rates by launching a market-leading ten-year deal. Nationwide has announced a ten-year fixed rate at just 3.49%, available to 70% borrowing with a £999 fee. The deal is also available to 85% borrowing at a higher rate of 4.54%.

“We’ve seen significant amounts of customers favouring longer-term fixed-rate mortgages this year,” says Richard Napier, Nationwide’s director of mortgages and savings. “In September almost a quarter of new reservations were for our five-year fixed-rate products. Prudent customers want to protect themselves against payment increases and so the introduction of a new ten-year fixed-rate deal is a logical addition.”

Other lenders have also launched competitive ten-year deals. The West Bromwich building society has cut the rate on its ten-year fix to 3.99%, available to 75% loan-to-value (LTV) borrowing with a £199 fee while Woolwich now offers a ten-year fix at 3.49%. This is available to 60% LTV with a £999 fee.

Think hard before you take a ten-year deal

While the cost of long-term deals may be falling, experts have warned borrowers to think hard before committing to a fixed rate for a decade.

Keith Osborne, editor of, says: “Having the opportunity to fix your mortgage at under 4% for ten years is almost too good to be true. However, you have to be completely sure that you’re happy to commit to a ten-year deal because the penalties for coming out of the product early can be punitive.”

For example, if you repay the Nationwide loan within the ten-year period you will pay 7% of the outstanding loan in the first five years and a smaller fee in any of the following five years.

However, innovative products such as a Newcastle Building Society deal which offers a ten-year fix but penalties for just five years may tempt more borrowers to take a longer-term product.

Osborne adds: “Most borrowers simply don’t want to commit for a ten-year period because they don’t know what their circumstances will be at that time. However, if the deals can be ported to a new property and don’t have heavy penalties for a decade then more people could be tempted to choose this type of product.”

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