Barclays now lets you fix your mortgage for a decade at 1.99%

Barclays offers Britain’s first ever 10-year mortgage at less than 2% – but is locking in for so long a good idea?

  • Barclays introduces first 10-year fixed rate mortgage under 2% interest
  • Rates on long-term fixes fall across the board amid increased borrower demand
  • Brokers warn borrowers that leaving these deals early could cost them 

Homeowners can now fix their mortgage for a decade at a lower price than a standard two-year deal as Barclays launches the first ever 1.99 per cent 10-year fix.

The deal, which is available up to 60 per cent loan-to-value and carries a £999 fee, is the first of its kind to offer 10 years of payment security for an interest rate under 2 per cent.

It comes as low interest rates, among a host of other factors including increased consumer demand, push long-term mortgage rates down to historic lows.

But how does Barclays’ new deal compare, and are there any dangers to locking in for so long? We take a look. 

Barclays has introduced the first 10-year fixed rate mortgage under 2 per cent interest

Why are banks offering such cheap deals?

Moves to tempt an increasing number of borrowers looking to fix their mortgages for longer were made well in advance of the coronavirus outbreak.

This growing number of borrowers may have grown faster still in the months since as homeowners increasingly look for stability amid bleak economic forecasts

This, combined with the current low cost of borrowing money for banks, has pushed rates on longer term mortgages down to levels not previously seen.

Barclays’ offer is currently the cheapest on the market, but there are other options out there which carry different benefits.

For example Barclays also offers a seven-year fix for 1.54 per cent at 60 per cent loan-to-value and a £999 fee – even cheaper than the 10-year deal, but without the security of the extra three years.

Lloyds also offers a 10-year fix at 60 per cent loan-to-value, at 2.08 per cent, with a £999 fee. On a £100,000 mortgage taken over 25 years, this would cost £4.39 a month more than Barclays’ offering, from £423.37 to £ 427.76 a month.

Leeds Building Society offers a near identical 10-year fix to Lloyds, at 2.08 per cent with a £999 fee, but Leeds’ offering is available up to 65 per cent loan-to-value.

TSB also offers a similar 10-year deal up to 60 per cent loan-to-value at 2.09 per cent with a £994 fee.

At the moment, Barclays’ new deal remains the cheapest but this could change. You can use This is Money and L&C’s mortgage finder tool to find the best deals for yourself.  

Should I lock in for longer?

Broker Private Finance's Chris Sykes

Broker Private Finance’s Chris Sykes

Locking in your mortgage payments for a decade helps provide certainty, but at the cost of the flexibility a shorter-term fix would offer. 

If you need to pay back your mortgage sooner, or get a different loan to borrow more or move house before the end of the term, there are usually expensive early repayment charges to pay.  

Barclays’ new offering carries a 5 per cent early repayment charge for the full 10 years, meaning you would need to pay 5 per cent of the outstanding loan to move away to another deal at any time.

There are certain deals out there, such as one currently available from TSB, that allow borrowers to fix for 10 years but only have to worry about early repayment charges for five years, according to mortgage broker Chris Sykes, of Private Finance.

However, typically these types of deal are a bit more expensive than standard 10-year deals, so may not be right for everybody. 

These terms are different on every deal so it’s important to double check how much it could cost you if your circumstances change.

Sykes said: ‘We haven’t seen too much of an uptick in demand for these products yet, but we expect to see more being taken to shield against any economic uncertainty.’  

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