• Mortgage Tree

Why locking in mortgage rates for five years is proving so popular

Mortgages with five-year fixed rates have undergone a surge in popularity with nearly half of mortgage customers opting for these deals.

Data from Paragon Banking Group revealed 49% of customers are now choosing an initial fixed rate period of five years compared to only 25% back in 2013.

Meanwhile, mortgages with rates fixed for two years have experienced a plunge in popularity with 37% of customers choosing the shorter term fixes compared to more than half in 2013.

Mortgage brokers think the fact the Bank of England base rate is currently low, coupled with fears over future rate rises, is main driver behind the soaring popularity of five-year deals, which allow customers to lock into a specified rate for a longer term.

What’s more, having certainty over payments for a longer period also played a key role in many customers’ decision, Paragon said.

Potential pitfalls of five-year deals

While they provide a certain amount of security, five year fixes aren’t necessarily for everyone. Indeed, several of those questioned in the survey of 200 mortgage intermediaries raised concerns.

They stressed that products with a longer term initial fixed period might only suitable for customers who expected to stay in their current home for an extended period. This was because anyone considering a house move might have to pay early redemption penalties which could outweigh the benefits of a longer term deal.

John Heron, managing director at Paragon, said: “The five-year fix has found a real sweet spot in the market.

“Low interest rates, economic uncertainty around Brexit, a drop in home-mover transactions and more remortgaging means that five year products have become a viable option for a much larger proportion of customers.”


Going forward, the brokers questioned as part of the Financial Adviser Confidence Tracking Index, did not see any reason for five-year fixed rates to fall out of favour.

However, many said a stable economic climate post Brexit, which could lead to an interest rate rise, was the most likely cause of any reduction in the attractiveness of the five-year fix.

Article by Kate Saines for www.whatmortgage.co.uk

#Brexit #mortgagerates #mortgagebroker #mortgagetree #fixed-rates

Here's what our clients say...

“Mortgage Tree showed me how to improve my credit rating as I had a few issues with my credit previously. As a result of their excellent advice I have now secured a mortgage at a great interest rate. They also helped me sort out life & critical illness cover which offers great protection for myself and my family. Mortgage Tree offers a fantastic service and I recommend them wholeheartedly.”

Charlotte - Leeds


Mortgage Calculator

Mortgage Tree - Mortgage Advisors York - Services & Standards

Mortgage Tree offers a nationwide mortgage broking service from our base near York, North Yorkshire. We specialise in mortgages and insurance. Whether you are a first time buyer or you are a buy to let investor with multiple properties, Mortgage Tree will ensure that you get the best products available.

We are a Whole Of Market broker which means that we will choose the best, most suitable mortgage for you from the hundreds available on the UK mortgage market. Our network also gets special discounted deals from lenders available only to our network.

We also provide insurance cover that will give you & your loved ones a blanket of protection that is so vital. We will endeavour to give you the best service that we can at all times.

Mortgage Tree is an appointed representative of Julian Harris Mortgages ltd which is authorised and regulated by the Financial Conduct Authority. Our FCA no. 304155

The Financial Ombudsman Service (FOS) is an agency for arbitrating on unresolved complaints between regulated firms and their clients. Full details of the FOS can be found on its website at www.financial-ombudsman.org.uk



Our Address...

Stay Connected...

© 2020 Mortgage Tree

Built by Elle Nelson Design

Mortgage Tree

Blake House

18 Blake St



01904 263012