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Number of 10-year fixed rates double

The number of 10-year fixed rate mortgage products has almost doubled in the past twelve months, says MoneyExpert.com.

The comparison website says the percentage of the fixed rate mortgage market offering terms of 120 months or more has risen from eight per cent of products in July 2007 to 15 per cent.

It says there are now 18 different 25-year fixed rate deals on offer from five different providers. In July 2007 there were only 9 such deals available.

While the total number of mortgage products has slumped by 647 products over that period – a shrinking of some 41 per cent of the market as a whole – the number of long-term mortgages has increased from 127 products in July 2007 to 137 now.

Director Sean Gardner says: “The credit crunch has prompted a flight to safety by borrowers who have been stung by dramatic rises in the rates on short-term deals. At the same time lenders are increasingly keen on signing customers up to long-term deals which offer them certainty.

“Long term fixed rate mortgages are no longer an oddity. And with competitive rates of interest in some circumstances they may well be worth considering.

Gardner adds: “However early redemption charges on long term deals tend to be more substantial than shorter fixed term mortgages. In some instances you can be hit with a charge of 13 per cent of the value of your loan – which on a £150,000 mortgage would mean paying £19,500 to get out of the deal.

“A rate of 6.5 per cent is not prohibitive and could prove to be a worthwhile long term strategy if you don’t mind accepting the risk that at some point you’re likely to be paying over the odds. Interest rates will eventually go down and that’s when people on fixed deals feel hard done by.”

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