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Cheapest Mortgages Are Now a 10-Year Fixed Rate Posted: 16th October 2022

Brokers are highlighting to home buyers and those looking to remortgage that the cheapest mortgage option is currently a 10-year fixed rate.

As interest rates continue to rise and the cost of living crisis takes hold, those looking to buy a home or remortgage will soon find that they need to take a longer-term mortgage deal to take out a mortgage.

These longer-term mortgages are not only cheaper, but it means that applicants won’t be subjected to stringent stress testing. It enables them to borrow larger multiples of their income as lenders cut the maximum loan size for short-term deals.

Buying a home with a 10-year fixed-rate means that people will have lower monthly repayments but won’t benefit from any fall in rates within the next ten years.

According to Moneyfacts, at the time of writing, the average rate on a 10-year fix was 5.78%. This is a jump from 2.99% this time last year. However, it’s also significantly less than the shorter-term fixes, which are currently around 6.5%. This demonstrates that the mortgage market is unrecognisable from a few years ago when longer-term fixes were more expensive.

Longer-term fixed-rate mortgages could be the only way some homeowners can remortgage, given the rising cost of energy, food, fuel and services. With rising energy bills, in particular, those applying for a mortgage are offered a smaller loan as their regular outgoings are considered.

The maximum loan size that buyers can borrow has fallen drastically. At the beginning of 2022, buyers could borrow around five times their salary. Due to the cost of living, this is now four, according to analyst Capital Economics. However, those borrowing for a 10-year fix will find that they can borrow more as they have less stringent affordability criteria because they are protected from future rate rises.

The good news is that by taking out a 10-year fixed rate, you’ll know precisely what you’ll be paying and will be protected from future interest rates. It also means that you can borrow more than you would if you were looking for a two- or five-year fixed rate.

Whatever your reason for moving; whether it's for extra space, to downsize or you may simply have found your dream home, Nicol can help. Our knowledge of the local property market helps us develop a marketing plan that's right for you and your property.
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If you are planning on selling your home, contact Nicol Estate Agents today for an appraisal of your property. Our Managing Director Douglas Nicol and Sales Manager Daniel Cohen carry out hundreds of market appraisals every year, giving them an intimate and unparalleled knowledge of the property market in Glasgow, from city centre apartments to family homes and building plots. We will talk to you about the property market in your area, compare sales evidence, local demand for similar properties, outline our tailored marketing plan and provide details of our sales support strategy right through to completion.