Is locking in for longer the future for fixes?

Mortgage brokers are reporting more client interest in fixed-rate deals beyond five years as rates on 10-year fixes fall below 2.5 per cent.

With the Bank of England base rate at 0.25 per cent, many borrowers have been looking to stay on variable rates to take advantage of the historic lows. This has led some lenders, seeking to compete for fixed-rate business, to divert the attention of borrowers away from variable deals.

The best rates on five-year fixes have fallen below 2 per cent while the best two-year deals for vanilla borrowers with high deposits have fallen below 1 per cent.

And the market for even longer-term deals is heating up as major lenders offer mouth-watering headline rates for their preferred borrowers.

Yet some borrowers persist in opting for shorter-term fixes and variables with a higher tolerance for the risks of interest rate rises.

In addition, many 10-year deals are available only up to 60 per cent or 70 per cent LTV, with heavy early repayment charges and arrangement fees of around £999.