Cheapest mortgage rate now below 4% - is it worth fixing fgor 10 years?

It can be tempting to consider long-term fixed rates and many people did last year when rates were volatile. However, these products usually come with tiered or flat early repayment charges. This means if your circumstances change you could be left paying a big penalty to exit the deal.

It would be very interesting to see the statistics of the number of long-term fixed rates arranged directly by the lenders on a non-advised basis versus those who received advice. It is important to carefully consider your financial needs when making such long-term commitments and not be drawn simply by the headline rate.

The risk of fixing at 4% now is that the economy falls flat on its face, inflation falls back to target or even below, as there is no money in the economy, and the Bank of England is forced to slash rates faster than they went up. Suddenly, you're stuck on a rate for a decade, double what is being offered. Of course, lots of things have to happen for that to become a reality, but the current transient nature of governments doesn't instil a sound economic plan for the future.

We announced this on our social media channels the day it happened, and the comments from the public that we have received is, why would anyone want to fix for this long when rates are dropping? Lenders offering these rates are simply trying to secure longer-term clients. Whilst this might be the right product for some people who are completely risk averse, they are a minority, and most people are waiting to take advantage of lower rates as they come along. They simply don't want to tie themselves into a rate that will undoubtedly be overpriced in the coming months and then have to pay large penalties if they wish to switch. I do expect more lenders to follow, initially on the 5+ year rates, but hope that lenders soon realize that clients are looking for shorter-term flexibility, and reduce the 2-year fixed rates also.

Breaking that 4% barrier is so important to the whole mortgage market, and gives us confidence that further rates will fall, even with the base rate set to increase further. The suitability of any long-term product should be checked with a qualified adviser, whilst it provides huge stability, which will come with constraints that need to be checked and qualified, and should not be taken purely due to price . But it's more about the message this sends out to the market and to those in the industry, and will encourage other lenders to take part.