Banks hike cost of 10-year mortgages

BANKS are increasing ten-year mortgage deal costs after the price of funding them almost doubled in three months.

The average ten-year fixed rate is now 3.2 pc, up from 3.12 pc in October.

On a typical £150,000 loan, this would increase monthly payments by £7 to £727.

Experts expect ten-year fixed deals to get even pricier as growing confidence in the economy increases the likelihood of an interest rate rise.

The cheapest ten-year deal is currently 2.49pc with TSB. It has a £995 fee and is available to customers with a 40 pc deposit. On a £150,000 loan, the monthly payments are £627.

By contrast, two and fiveyear fixed rates are still falling, says data firm Moneyfacts.

The average two-year rate is 2.35 pc, down from 2.38 pc three months ago.

And the average five-year fix is 2.95 pc, down from 3.02 pc.

Andrew Montlake, of broker Coreco, says: ‘It could only be a matter of time before we see two and five-year fixes go up.’