A number of mortgage lenders have pulled their 10-year fixed rate mortgage products from the market this week following the latest interest rate rise from the Bank of England.
Leeds Building Society, The Co-operative Bank and Platform have all removed their 10-year fixed products from the market in the last few days.
According to Moneyfacts, the number of 10-year fixed mortgages available on the market has fallen from 169 on May 16 to 159 products today (May 23).
Moneyfacts finance expert, Rachel Springall said the move may be in response to interest rate volatility or potentially demand.
Earlier this month, the Bank of England raised interest rates to their highest level since 2008, with the base rate now sitting at 4.5 per cent.
Those in the mortgage space said the move makes sense given that interest rates are as high as they are.
“It's not surprising some lenders are now pulling them - we would have trouble recommending applicants take such a long-term product in a semi-peak environment,” Gary Bush, a financial adviser at MortgageShop.com said.
“Once the market calms down and we see fixes all in the 3 per cent banding they will start to look like a feasible option,” Bush added.
According to Moneyfacts, the average rate on a 10-year fixed mortgage has risen from 4.99 per cent to 5.06 per cent since the start of April.
This time last year (May 1, 2022) the average rate was 3.21 per cent, up from 2.97 per cent a year earlier.
While the number of 10-year fixed products has dropped in the past month, the total number available on the market has increased from 129 in May last year and 125 in May 2021.
A spokesperson for Leeds Building Society said the withdrawal was among a number of changes made to its range, as “funding costs increased and to enable us to manage volumes”.
They added: “As you’d expect, we keep our products under constant review. I’m advised that we’ll return to the market at the appropriate time.”
However, Moneyfacts’ Rachel Springall noted that the withdrawal might influence other lenders to follow suit.
“Those borrowers who want peace of mind with their mortgage repayments may well be comparing both five-year fixed mortgages and even 10-year fixed deals amid interest rate uncertainty, but these average interest rates are around 2 per cent higher than they were a year ago,” Springall said.
“A decade-long fixed mortgage is a commitment, and consumers must be confident with the length of the term before they apply, as an early repayment charge would apply should they exit their mortgage early,” she added.
According to data from conveyancing services firm LMS, just 2 per cent of borrowers remortgaging in April opted for a 10-year fixed product.
By comparison, 28 per cent of borrowers chose to go with with a two-year fixed-rate deal, while 13 per cent opted for a tracker product.
jane.matthews@ft.com
