As rates start to come back down, how long should you fix for?

Some of the UK's biggest banks have cut rates to offer market-leading deals for borrowers looking to remortgage, with five and 10-year deals below 4%. In this article, we'll explain what you need to weigh up when choosing between fixed-term mortgage deals, and how long you should lock in for.

Firstly, while rates are falling, the last few months have shown how volatile the market can be, so it's tough to know how long you should lock in your mortgage for. Most fixed-rate mortgages are either two or five-year deals. If predictions of continued mortgage rate reductions come to fruition, a short-term fix could be appealing, as borrowers could potentially get a better deal in two years' time. However, without a crystal ball, it's difficult to know for sure.

Five-year fixes provide more stability, as you'll know how much your bills are going to be for a longer period of time. It's important to consider whether committing to a deal for that long fits in with your plans and circumstances. Leaving a deal early could result in early repayment charges. On the other hand, by fixing for 10 years, you're taking fluctuations out of the game, but it may not be the right option for everyone.

Financial forecasters have predicted that the base rate will rise further come the next review this month, but experts believe this could be one of the final increases this year, with the rate not expected to surpass 4.5%. Mortgage lenders are likely to have taken future base rate rises into account with their current offers, so further hikes aren't anticipated to have a significant knock-on effect on fixed-term rates.

When considering how long to fix your mortgage term, it's important to take advice from an independent mortgage broker, who can help you decide what's right for your circumstances. It's also crucial to be wary of early repayment charges, which can be costly.

So, while there are a lot of factors to consider, potentially now could be a good time to fix your mortgage term, with rates currently below 4%. Whether you choose a two, five or 10-year deal depends on your individual circumstances, and speaking to an independent mortgage broker can help you make the right decision.

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Risk warning: Your home or property may be repossessed if you do not keep up repayments on your mortgage. You may be charged a fee for mortgage advice.