Home byers are increasingly looking for longer-term fixed loans that will protect them from rising interest rates and higher living costs
Lloyds Banking Group PLC (LSE:LLOY) has launched a 10-year mortgage with a fixed interest rate of 1.66%, as home byers look for loans that will protect them from rising interest rates and higher living costs.
The mortgage is the cheapest on record, mortgage brokers told the Telegraph, beating the previous market-leading rate of 1.74pc from TSB.
The Lloyds loan is restricted to remortgage customers with a deposit of at least 40%, and a £1,000 fee applies. There is an early repayment fee of 6% for the first five years.
Halifax PLC is also offering a 10-year fixed mortage with a rate slightly above that of Lloyds at 1.68%. The loan is for new buyers with a 40% deposit.
Other banks have also cut their rates on 10-year loans.
The Bank of England is expected to raise its base rate this week from 0.25% to 0.5% in response to rising inflation, which hit 5.4% in December, its highest for 30 years.
Home byers have traditionally favoured two and five-year fixed mortgages, but the longer-term fixed deals are becoming increasingly popular.
The number of borrowers searching for 10-year fixed deals at the end of January was up 70% compared to last October, according to mortgage technology firm Twenty7Tec.
David Hollingworth, of mortgage broker L&C, said many borrowers were taking advantage of low rates before they disappeared for good.
“Lenders are picking up on this extra business and frankly can’t afford to not be competing with low rates,” he told the Telegraph.
“There is a double benefit for borrowers in that they can make the most of these cheap rates, whilst also protecting themselves against further rate rises this year.”
Read More: Lloyds Banking Group PLC launches cheapest ever 10-year fixed-rate