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Analysis: 10-year fixes are not for the masses

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We are increasingly seeing 10-year fixed-rate mortgages. Barclays launched a 2.99 per cent deal to great fanfare, followed by Nationwide with a record-low 2.84 per cent product. TMW has launched a buy-to-let 10-year fix, at 4.99 per cent.

But despite the press coverage of such rates, these products will have limited appeal. A lot can change in 10 years, from both personal and economic perspectives, so many borrowers would not want to look beyond the next two or three years. 

A key market for these products is customers with only 10 years left on their mortgage, or who may be planning retirement and are keen to fix their mortgage for the rest of its life and then forget about it.

These products may also be shunned by many first-time buyers, who are often at the early stage of their career and require breathing space in case they want to relocate or start a family. They also tend to need a higher LTV and Barclays’ 2.99 per cent deal requires a 40 per cent deposit.

These long-term products need an ‘early repayment free transfer window’, which can be used to either switch to a different product, remortgage to another lender or repay the mortgage in full.

Many will cite our historically low interest rates as a reason to fix for as long as possible. But forecasts of a rise have been updated until after the general election at the earliest and brokers may therefore advise customers not to worry for the time being and take advantage of tracker and discount rates as an alternative to two- or three-year fixed rates. 

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