Over a third of homeowners with a mortgage would consider fixing their deal for a decade, research from Mortgage Advice Bureau has found.
The top reasons for looking to fix for 10 years among those surveyed were to have peace of mind by knowing what their monthly expenditure would be (68 per cent) and a belief that interest rates will go up (56 per cent).
Mortgage Advice Bureau head of lending Brian Murphy says: “The number of customers who would consider taking a ten-year fixed-rate deal comes as no surprise, as we’ve seen an increase in the number of lenders bringing new products to market over recent years.
“Borrowers clearly want to know that they are making a sensible financial decision and that they are safeguarding themselves against potential financial risks such as interest rate changes. Knowing exactly how much your mortgage repayments are going to be for the next decade offers obvious reassurance for consumers, regardless of what happens to the Bank of England base rate, which, as we are already aware, is almost certain to increase at some point this year.”
However, the MAB research found that 60 per cent of homeowners were unaware that it was possible to choose a ten year fixed mortgage.
Murphy says: “Decade-long fixed rates have been available for some time, however there is a lack of consumer awareness of them, as the results of the research suggest. But once potential borrowers discover that this type of product is available, the appeal for some is easy to understand. That’s because the security of a ten-year deal will see certain types of borrowers through to a significant point in their lives, such as perhaps seeing children off to university or reaching retirement age.
“Alternatively, some borrowers may find that ten years is the length of time they have left on their mortgage, and therefore fixing for the remainder of the term provides an inevitable amount of reassurance.”
“However, for other borrowers, fixing for a decade may not provide the flexibility they need in the shorter term, for example if they need to move home within the next few years, in which case a ten-year fix may not be right for them. It’s always worth bearing in mind that the majority of fixed-rate deals have significant Early Repayment Charges associated with them, so it’s worth checking the small print and doing your sums to decide what works best for your own circumstances.”