Do you think you know what mortgage rates will be over the next ten years? Your mortgage lender thinks they do; there have been an increasing number of long term fixed interest rate mortgage loan offers. These types of loans give homeowners the option of knowing exactly how much their mortgage repayments will be over the long term. Depending on what happens to variable mortgage interest rates, you may end up paying more for a fixed interest rate, but for many the security and peace of mind will be worth the extra expense.
Mortgage lenders expect the number of long term mortgage loan offers to increase over the next months as lenders look to cut down on the number people refinancing for better deals. This type of loan can beneficial for homeowners as they don’t have to pay extra fees, like exit and application fees, the costs that come with refinancing down the line.
What will happen to interest rates over the next ten years is anyone’s guess. Interest rates are at historically low levels and it is impossible to predict rates as there are so many variables involved. At this time ten years ago the interest rate was set at 6.63%; in August of 1985 the mortgage interest rate was 11.38%. If a homeowner had taken a 10 year fixed back then, they would have missed out on all the rate cuts of the last ten years, paying thousands more than if they had taken several two year fixed mortgage loans. It is unlikely that rates will go much lower than their current lows, but there is little chance that they will go up much either. Homeowners should be aware of the early repayment charges associated with refinancing some mortgages. These costs can add up quickly and take a bite out of the potential savings of refinancing a mortgage. These repayment fees are designed to prevent customers from refinancing during the duration of the mortgage.