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Story for The Times: More interest in 10-year fixed-rate mortgages?

Journalist: George Nixon, The Times and The Sunday Times

ended 12. January 2023

Morning! Data from UK Finance has found increased, albeit still small, interest in 10-year fixed-rate mortgages over the last year as more homeowners have looked to lock in for the long-term. 

In August last year 5% of new lending was fixed for more than 5 years, the greatest proportion since August 2017. 

Brokers/advisers, have more of your clients been taking 10-year (or even longer) fixes recently? Would any of them be happy to chat about why they did so for a story in The Times? Thanks!

7 responses from the Newspage community

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Samuel Mather-HolgateVerified
Independent Financial Adviser at Mather and Murray Financial
We are seeing more clients discuss the option of fixing for a longer term with us, but few actually go for this option. It's a question of pricing. The money markets look at what the UK have to do to deal with inflation and see that interest rates in the medium term will go higher and remain high for a long period. This is because inflation won't fall back to target for about two years. However, the outlook for the economy is poor and, eventually, rates will have to come down to stimulate growth. This means the premium you normally pay for a longer fixed rate isn't there, as long term interest rates are expected to fall, compared to two or five years. When borrowers understand this, they are actually quite happy to sit on a much cheaper 2-year tracker, compared to its fixed counterpart and then see where rates are in 2025.
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Imran HussainVerified
Director at Harmony Financial Services
Interest in 10-year fixed rates will always come from the small minority of borrowers who have no intention of moving or borrowing more money, or those who simply have ten years left on their mortgage and want to avoid any hassle and fix for one last time and be done with it. But it has to be right for the individual's circumstances and I don't expect to see any first-time buyers jumping in for a 10-year fix anytime soon. The 10-year fix is out of sync with the increased flux of younger homeowners.
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Mike StatonVerified
Director at Staton Mortgages
I don't think the majority of 10-year fixed rates will have been taken out on an advised basis. I think anybody who wants to take out a 10-year fixed rate is doing this in pure panic. Taking out a 10-year fixed rate lands you with huge early repayment charges and higher rates for the future than UK swap rates are predicting. Basically, if you sign up for a 10-year fixed rate, only be happy if the only thing you are looking for is stability. You will not be in a position to complain if you are out of pocket in 10 years' time, which you probably will be.
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Kylie-Ann GatecliffeVerified
Director at KAG Financial
We have had very little interest in ten year fixed rates, as interest rates offered by lenders has been falling for the past few months - most clients believe this will continue. Although ten year rates can look desirable due to the swap rates improving, fixing in for ten years can be a big commitment for a lot of people. We see more and more clients wanting flexibility with the option to review their circumstances on a regular basis.
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Michael Webb0
Managing Director at Mortgage Republic
10-year fixed rates secured at the beginning to middle of 2022 will undoubtedly prove to be significantly beneficial for those borrowers at the lower loan to values who tied in on rates at low 2%s. With inflation already beginning to climb, and the start of the Ukraine war, the perfect storm was coming for rates to begin to rise. Those who took mortgage advice and deemed it appropriate were very sensible to take longer-term stability with their mortgage, especially with the added flexibility of portability from most mortgages. I am happy to chat as both mortgage broker and a borrower who tied in for 10 years as of last year on my own mortgage.
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Gary Bush0
Financial Adviser at MortgageShop.com
10-year and even longer-term fixed rates made a big appearance during 2022 and this has now continued into 2023, mainly due to the cheaper cost of borrowing available for these extended fixed deals. As the UK mortgage market has an average lifespan per account of between 2 to 5 years, there could be some clients stuck with a lender that, for their next purchase, they get an unfavourable response from. This could be in relation to the size of loan agreed, property details of the new purchase or any number of variables that the various lenders have a distaste for either now or at the time when the new property has been found. We'd suggest caution if borrowers have specific reasons to be looking at their mortgage in the upcoming period, say 2-5 years, whether for home relocation, home improvements or university lodging purchases.
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Austyn JohnsonVerified
Founder at Mortgages For Actors
I have very recently quoted for a 10-year fixed rate with Halifax, and it's virtually the same as a current 5-year fix. We do need to be careful when recommending these, as so much can happen over 10 years, but if it works out well for the client's needs and the market is not predicting a huge drop in rates, it's a win-win situation.