The move comes as some homeowners seek to lock down their monthly payments ahead of a predicted base rate rise, and amid the rising costs of living
Halifax and Lloyds are poised to launch a series of 10-year fixed mortgages with best buy rates, offering the certainty on monthly payments until 2032.
The move comes as some homeowners seek to lock down their monthly payments ahead of a predicted base rate rise, and amid the rising costs of living.
Halifax is offering rates as low as 1.68 per cent for home movers, while its Lloyds Banking Group stablemate Lloyds Bank is offering a 1.66 per cent rate for remortgage customers.
Homeowners coming to the end of fixed terms are being urged to lock in a new fixed deal, as interest rates are predicted to rise several times throughout 2022
Borrowers typically fix their mortgage for two or five years, after which point they can remortgage to another deal.
At a time when interest rates are rising, it could be tempting to lock in one of the low rates for longer – though borrowers should beware of the early repayment charges which lenders can levy if they need to remortgage or move before the ten years is up.
All of the mortgages are subject to early repayment charges, which will be levied if the customer needs to remortgage or pay off their loan before the 10 years is up. This could involve spending thousands of pounds to leave the deal early.
If they do this in the first five years, the charge will be 6 per cent of the total loan amount. In year six this will fall to 5 per cent, in year seven to 4 per cent, year eight to 3 per cent, year nine to 2 per cent and, in the final year, 1 per cent.
The Bank of England’s Monetary Policy Committee is set to meet on Thursday, and it is predicted that it will increase the base rate from 0.25 per cent to 0.50 per cent.
It last raised the rate in December, when it increased the rate from 0.1 per cent to 0.25 per cent.
While this would not directly affect the interest rates on new fixed rate mortgages, banks usually increase them in line with a base rate rise because the charges they pay to borrow money will go up.
Customers on variable mortgages that track the base rate will see their monthly payments rise immediately.
Those within existing fixed rate deal periods would not see any change to payments, but borrowers due to come off fixes this year are nervously eyeing the bank’s new-found appetite for raising base rate.
Those coming to the end of their current deal should shop around now as the expectation is that fixed rates will rise.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: With expectation of a base rate rise on Thursday, borrowers will undoubtedly be concerned as this comes so soon after the last increase.
Thankfully, most borrowers today are on fixed rates so will not see any change to their monthly payments, he said.
However, those on tracker products will see an increase in their payments. Those coming to the end of their current deal should shop around now as the expectation is that fixed rates will rise too, he said.
He said: Borrowers may be able to secure today’s pricing up to three, four or six months in advance, depending on the lender.