Why is this happening now? Well it’s a down to a combination of factors. For example the new mortgage rules introduced earlier this year have caused disruption to a market that was booming. So some lenders are making up for that lag by offering lower interest rates on five or even 10-year mortgages.
Plus, lenders have targets to hit and there’s been a cut in costs of lending; the heat is on for lenders to sign up more property buyers.
And with expectations of a hike in rates by the Bank of England (now predicted for summer 2015), and rumours of a slowdown in economic recovery, customers have been seeking out deals that protect them against changes over the next few years.
Indeed, the new deals are very tempting, but we can’t highlight enough that boning up on what’s available before signing up is really important.
The pros are obvious: Having a fixed rate for a few years helps you plan ahead. Also there are different fees according to the loan-to-value, so look at the product charges and what works for you. You could get a sweet deal.
Cons include possible hefty repayment charges on long-term mortgages if you can’t transfer the loan to a new home, or if you find yourself in a position to pay it off completely.
These new products are a welcome move for customers, and there may be more on their way. Give us a call to find out what it means to get a long-term fixed-rate mortgage.