Cheapest-ever 10-year fixed mortgage launched

Barclays’ 10-year fix, offered under the Woolwich brand, comes with a rate of just 2.99% and a £999 fee. However to fix your mortgage rate under 3% until 2025 you’ll need at least a 40% deposit or equity in your property. Borrowers with a 25% deposit can fix for 10 years at 3.99%.3% stamp duty set to become the norm

Barclays’ product launch comes after several other lenders launched competitive 10-year deals at the end of 2014. In December Santander and TSB both launched 10-year fixes starting at 3.44%.


Increasing choice in the 10-year fixed market

The past year has seen a massive increase in the number of 10-year fixed rates on offer. According to financial analyst Moneyfacts, this time last year there were just eight 10-year deals for borrowers to choose from. By October that number had risen to 22, but just three months later the figure now stands at 77. This means the 10-year mortgage sector is over five times larger than it was in January last year.

Historically borrowers have favoured shorter term deals, but the low rates now available on longer term fixes mean fixing for longer is becoming increasingly attractive.

According to Moneyfacts, the average rate for a 10-year deal fell from 4.23% in January 2014 to 4.17% today, the lowest rate ever recorded for this sector.

In some other countries long-term fixes are the norm. In the US for example, it’s commonplace to fix your mortgage rate for 25 or 30 years.

Pros and cons of 10-year fixes

If you fancy fixing your mortgage rate for 10 years, now is a good time to do it with so many great rates on offer. You can then sit back and know for certain what your mortgage payments will be for the next decade.

One advantage of 10-year fixes is that you won’t have to go through all the hassle of remortgaging again in two or five years, working out costs, or worrying about your credit record or equity in your home.

Traditionally borrowers have shied away from longer-term fixes for fear of missing out on better rates that become available later on. But with the Base Rate at an all-time low and the next movement definitely being upwards, chances are you shouldn’t be too concerned about better rates coming along later.

However, there are several things borrowers should watch out for if they plan to fix for 10 years. For example, is the loan portable? This is where you take your existing mortgage with you when you move home. You might not be planning to move house, but a lot of things can change in a decade.

It’s also a good idea to check the deal’s early repayment charges (ERCs). Barclays’ 10-year fix, for example, comes with some hefty ERCs. Borrowers wanting to redeem their mortgage early will have to pay 6% of the balance repaid for the first seven years and 3% in the last three years.

How do rates compare?

Whether you should fix for 10-years could well depend on the rate you’re currently on. If you’re one of the lucky borrowers who’s on an ultra-low tracker with a current pay rate of less than 2%, you’ll be wise to stay put until a Base Rate rise looks more imminent.

If you do need to remortgage, or are buying your first home, you can get a much cheaper rate by opting for a two-year or five year deal. For example, HSBC is offering a two-year fix at 1.29% with a £1,499 fee. You’ll need a 40% deposit or equity to be eligible.

Monthly payments on a 25-year £200,000 home loan would be £780.28 with HSBC compared to £947.38 on Barclays’ 10-year deal.

HSBC subsidiary First Direct is offering a five-year fix at 2.39% to borrowers with a 35% deposit. However, this comes with a £1,450 fee you need to factor in.

Doing the sums

Big arrangement fees, such as those levied by HSBC and First Direct, can mean a cheap rate doesn’t necessarily mean a cheap mortgage so it’s important to do the sums. This means working out exactly how much you’ll pay in total (monthly repayments plus fees) over the fixed term, whatever length of fix you opt for.

For example, Yorkshire Building Society is offering a two-year fix at 1.39% with a £975 fee. Over two years, with a £200,000 mortgage, this would cost of a total of £19,924 compared to £20,225 with HSBC. So the Yorkshire mortgage works out £301 cheaper, despite boasting a larger interest rate.

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UK house prices climb 0.4% in August: survey

British house prices rose in August for the seventh month in a row, as buyers returned to the market with the help of government-backed schemes, a survey showed on Friday.

Prices rose by 0.4 percent in August from July, according to data from home-loans provider Halifax. The data covers all categories of homes including apartments.

Halifax, which is part of state-rescued Lloyds Banking Group (LSE: LLOY.L – news) , added that prices rallied 5.4 percent in the three monthsto August compared with a year earlier.                                                                                photo_1378457513396-1-0_original

That was the biggest annual increase since June 2010.

The average price of a home in Britain meanwhile stood at £170,231 ($265,515, 202,324 euros) in August.

“Economic improvement and low interest rates, supported by official schemes such as Funding for Lending and Help to Buy, appear to have boosted housing demand in recent months,” said Halifax housing economist Martin Ellis.

“Nonetheless, relatively modest economic growth and below inflation rises in earnings are likely to act as a brake on the market.

“Overall, house prices are expected to rise gradually over the remainder of the year.”

House asking prices reach new high.

House sellers’ asking prices have soared to a new high, in further signs of confidence returning to the market, a property website has reported.

A 2.1% month-on-month rise pushed average prices to £249,841 this month, with new record prices set in London, the South East and East Anglia, according to Rightmove.

This has been the strongest start to the year since 2004 in terms of asking prices, with average prices rising by 9.1% or more than £20,000 in 2013 so far, the website said.

London asking prices surged past the half a million pound milestone for the first time this month, standing at £509,870 typically.

As well as being more than double the national average, asking prices in London were 8.6% higher than a year ago.

Press Association

Mortgage rates at lowest ever

There has never been a better time to take out a mortgage if you look at headline interest rates, but that’s not all there is to it.

Mortgage lenders appear to be giving with one hand while taking with the other, as they drop rates to all time lows, but ramp up deal fees to the highest level ever.

In just the first few months of this year alone, the average mortgage fee has jumped by £100 to a record high of £1,522, according to analysis by

At the same time, eye-catching headline rates have plummeted. The average two-year fixed-rate mortgage for homeowners with a 40% deposit is now at 3.5%, dropping from 3.95% at the start of the year.