Interest rates for long-term fixed rate mortgages have been rising despite two cuts by the Bank of England, according to MoneyExpert.com.
However, the number of mortgage deals with fixed rates lasting ten years or more has increased, something the Government sees as vital to improving housing affordability.
According to MoneyExpert.com, fixed rates lasting ten years or more account for around 11.5% of all fixed rate deals in the market, compared with 8.9% in April 2007.
MoneyExpert.com says increased demand from consumers has cause lenders to expand into this area, but it has also led to higher interest rates despite recent cuts in the base rate.
In April last year, the average interest rate on a long-term product was 5.89%, but has risen to 6.14%, with some products priced as high as 7.59%.
Sean Gardner from MoneyExpert.com comments: “Average rates on long term deals are up, meaning the consequences of making such a big decision are even more severe. If interest rates start to spiral, you’ll be laughing. But if they continue to drop then you could have saved money sticking to shorter term arrangements.”
MoneyExpert.com says most long-term deals are between 10 and 15 years, however, Manchester Building Society offers a fixed rate lasting 30 years, the longest term in the market.
Gardner warns that many customers are experiencing difficulties due to the rising cost of fixed rates, despite cuts by the Bank of England as lenders have become more nervous about exposing themselves to risk.
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