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Halifax and Lloyds best buy 10-year fix mortgages ahead of base rate rise 


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 cost of living crisis. 

Halifax is offering rates as low as 1.68 per cent starting from 1 February for home movers, while its Lloyds Banking Group stablemate Lloyds Bank is offering a 1.66 per cent rate for remortgage customers. 

Time to remortgage? 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

Both are currently the best buys for those with 40 per cent deposits. The Halifax rates are available via mortgage brokers or for customers who go direct to the bank, while the Lloyds rates are only available to customers dealing direct. 

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 today’s 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 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 to the end of their current deal should shop around now as the expectation is that fixed rates will rise

Mark Harris, mortgage broker 

 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.

‘However, those on tracker products will see an increase in their payments. Those coming to to the end of their current deal should shop around now as the expectation is that fixed rates will rise too. 

‘Borrowers may be able to secure today’s pricing up to three, four or six months in advance, depending on the lender.’ 

Halifax’s 1.68 per cent rate is only available via selected mortgage brokers, to home movers who have a 40 per cent deposit. It also comes with a £999 fee, with the rate on the equivalent fee-free product coming in at 1.87 per cent.

10-year fixed rate mortgages: Best buys for purchase of £330,000 home
Lender  Deposit  Rate  Fee  Monthly payment  Total interest
Halifax 40%  1.68%  £999  £861  £46,100 
TSB  40%  1.74%  £995  £823  £47,800 
Halifax  40%  1.87%  £0  £835  £50,500 
Virgin Money  40%  1.89%  £270  £837  £51,400 
Skipton BS  40%  1.93%  £995  £841  £53,300 
Based on a 25-year mortgage term 
10-year fixed rate mortgages: Best buys for purchase of £280,000 home 
Lender  Deposit  Rate  Fee  Monthly payment  Total interest 
Halifax 25%  1.77%  £999  £867  £51,000
Virgin Money  25%  1.89%  £270  £879  £53,900 
Halifax  25%  1.93%  £0  £883  £54,900 
TSB  25%  1.94%  £995  £884  £56,200 
Leeds BS  25%  1.99%  £999  £889  £57,700 
Based on a 25-year mortgage term 

Those with 25 per cent deposits can get a 1.77 per cent rate with a £999 fee, or 1.93 per cent with no fee, at Halifax, rates which also make the best buy tables.  

Remortgage customers at Halifax are subject to higher rates, which do not make it in to the best buy tables. 

Those with 40 per cent deposits can get a rate of 2.43 per cent with no fee, or 2.27 per cent with a £1,000 fee.

Those with 25 per cent deposits can get a rate of 2.67 per cent with no fee, or 2.46 per cent with a £1,000 fee.

Decade-long deals: Halifax's new rates will benefit home buyers looking to fix for 10 years, while Lloyds Bank's offering is better value for those seeking a remortgage

Decade-long deals: Halifax’s new rates will benefit home buyers looking to fix for 10 years, while Lloyds Bank’s offering is better value for those seeking a remortgage

At Lloyds, the best buy rates are for remortgage customers rather than home buyers. 

Those with a 40 per cent deposit can get a table-topping rate of 1.66 per cent, if they pay a £1,000 fee. Without the fee, however, the rate is far higher at 2.23 per cent.

Remortgagers with 25 per cent deposits can also get the best rate on the market, 1.74 per cent, if they pay a £1,000 fee. Without a fee, the rate is 2.35 per cent. 

Home buyers rates are higher at Lloyds, however. Those with 40 per cent deposits can get a 2.99 per cent rate with no fee, or 2.49 per cent with a £1,000 fee.

On a 25 per cent deposit, the fee-free rate is 3.21 per cent, and with a £1,000 fee, 2.71 per cent.

10-year fixed-rate mortgages: Best buys for remortgage on £330,000 home 
Lender  Deposit  Rate  Fee  Monthly payment  Total interest 
Lloyds 40%  1.66%  £1,000  £807 £45,000
TSB  40%  1.74%  £994  £814  £47,300 
Virgin Money  40%  1.89%  £294  £829  £50,900 
Skipton BS  40%  1.93%  £995  £833  £52,700 
Leeds BS  40%  1.93%  £999  £833  £52,700 
Based on a 25-year mortgage term 
10-year fixed-rate mortgages: Best buys for remortgage on £280,000 home 
Lender    Deposit  Rate  Fee Monthly payment  Total interest 
Lloyds    25%  1.74%  £1,000  £864  £50,100 
Virgin Money    25%  1.89%  £294  £879  £54,000 
TSB   25%  1.94% £994  £884  £56,200 
Leeds BS    25%  1.99%  £999  £889  £57,700 
Yorkshire BS    25%  1.99%  £1,044  £889  £57,800 
Based on a 25-year mortgage term 

Andrew Assam, mortgages director at Lloyds Banking Group, said: ‘With the prospect of interest rates rising this year, many homebuyers and homeowners are looking for the security of knowing their mortgage payment is not going to increase, while others are simply looking for a better mortgage deal than they are currently on.

‘With these new rates, we are able to offer some of the best long-term mortgage deals on the market; giving the peace of mind people seek and a low rate.’

Should you fix your mortgage for a decade?

Fixing for a decade could allow borrowers to lock in a low rate before they rise further, but it comes at a cost in terms of a premium on the rate and lack of flexibility compared to shorter deal periods. 

City analysts are anticipating that the base rate could increase five times this year

They are predicting that rates will jump from the current level of 0.25 per cent to 1.5 per cent by the end of the year.

That would be the highest level since the depths of the financial crisis in 2009 – with the increase adding almost £1,300 a year to the cost of a typical mortgage.

However, ten years is a long time and rates could start to come down again in the future. 

They could even drop below today’s rates, though they are very low in historical terms. 

However, brokers say that the main risk for a borrower taking out a longer mortgage fix today would be the early repayment charges.

These are fees which lenders charge if a borrower wants to repay more than the agreed proportion of their mortgage, before of the end of the fixed term. 

Sometimes they can be as much as 10 per cent of the mortgage balance.  

Fixing for 10 years could shield homeowners from future rate rises - but mortgage brokers are warning that they need to be aware of early repayment charges in case circumstances change

Fixing for 10 years could shield homeowners from future rate rises – but mortgage brokers are warning that they need to be aware of early repayment charges in case circumstances change

Harris said: ‘TSB, Virgin, Leeds and Halifax are all changing or improving their longer-term fixes as their appeal grows among borrowers worried about interest rate rises and the higher cost of living.

‘While these products are competitively priced, care should be taken when considering how long to fix for. A long term may suit some borrowers but not all and making the wrong call could result in an expensive exit penalty.’

Harris added that borrowers should consider their personal circumstances, and whether they are likely to want to move in the near future.  

‘Those in their “final” home may find it the right thing to do, but maybe those buying with different goals may find a shorter term to be a wiser option.

‘Also those expecting a large capital sum at some point, such as a bonus or inheritance which could be used to pay off the mortgage, may be better off with a shorter term,’ he said. 

​Dominic Agace, chief executive of leading estate agents Winkworth, said that taking a five-year fix may be a better option for those who did not have such a clear view of their longer-term plans. 

‘If you are in a stable part of your life personally and job-wise, then it is very much worth considering a longer-term fix – but even then, 10 years is a long time. 

‘For many, long terms fixes can limit your flexibility in moving without redemption penalties. These need to be weighed up in the context of any potential change of circumstance in the foreseeable future. 

The rates of 1.68 per cent to 1.93 per cent are historically very cheap and therefore attractive, but it does also reflect the banks’ view that interest rate rises will be incremental and paced over time. 

‘For most people, I would say a five-year fix represents a better balance between the security of fixing future payments and allowing for life changes in future home requirements.’

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