Recently a couple of lenders have announced that they are bringing out a 15 year fixed rate mortgage product. This follows the trends of recent years with a rise in longer term fixed rates becoming available, with 7 year and 10 year fixed rate mortgages being more common. Therefore the addition of a 15 year fixed rate shouldn’t come as too much of a surprise.
With all the uncertainty surrounding Brexit, and now maybe more pressingly, the global economy declining leading to speculation of another recession, lenders that bring in a 15 year fixed rate could see quite large demand for this product.
At the time of writing there is a product at 75% loan to value with Accord Mortgages, it is a 15 year fixed rate at 2.89%, there is a £495 product fee but it comes with a free valuation. There is a feature where you can make 10% overpayments each year and the mortgage is portable (meaning you could move it to a new property provided you, and the new property, meet eligibility criteria at the time). This product will of course be appealing to the more cautious homeowner among us who sees their property as their end home or long term home, however with an interest rate of 2.89% for 15 years I could see it being of interest to a lot more home owners.
This is complete conjecture but interest rates can’t really get that much lower, and longer term interest rates are more likely to increase rather than decrease. Having the long term security of an interest rate that is less than 3% for 15 years seems like one heck of an option, yes you could get a lower interest rate doing a 2 or a 5 year fixed rate but what’s to say that at the end of that fixed rate period you will still be able to get a sub 3% interest rate.
For various reasons a long term fixed rate isn’t right for everyone, even if it is a good deal, so you should always seek advice from an independent mortgage adviser when considering your mortgage options.
Daniel Brown BSc (Hons), DipPFS Cert SMP
29th August 2019