A number of lenders have launched long-term fixes over recent years with Barclays being pipped to the post by Nationwide earlier this week, introducing the lowest 10-year fixed rate available on the market.
However, just over half (53%) of respondents to the poll did not think customer demand for such products was on the rise, with 47% saying they were becoming more favoured.
Prolific Mortgage Finance managing director Lea Karasavvas said while 10-year fixed rates were still a very niche product, they were being more discussed than ever.
“We have had some clients 10 years away from retirement age that see this as a very conservative part of their pension planning and that is where we are seeing particular interest.
“It still carries the fear of long term commitment for others, but providing portability is an option that is being considered. Our clients’ fear, is that the mortgage market has seen so much change over the years and that tying themselves into something now could create issues in the future if they do need to move and top up or port in the future,” he added.
Chapelgate Private Finance associate director Colin Payne echoed Karasavvas’s comments: “While in theory a rate can be ported, if a borrower has a change in circumstances which is very likely during the course of 10 years there is absolutely no guarantee that the lender will agree to such a request which may result in the borrower having to look elsewhere incurring a hefty early redemption charge.
“There will also be instances where borrowers may sell and not have a further property purchase planned immediately, again incurring an early redemption charge.”
Payne said lenders needed to be more innovative when it came to early redemption charges and longer-term fixed rates: “There is no reason why lenders nowadays, as can be seen with Newcastle BS, cannot include similar features. I accept that it may impact a little on pricing but a sub 3.5% 10-year fixed rate would still offer excellent value.
“Ultimately, however, the main obstacle to lenders shifting more longer-term fixed rates is borrower attitudes and with two-year fixed rates at once-in-a-lifetime levels and with Bank Rate at 0.5% for 71 months and unlikely to change this year changing attitudes is arguably the hardest thing to do.”
