Darling says longer term fixed rate mortgages to become the norm
February 17, 2008
Chancellor of the Exchequer Alistair Darling has stated that there is to be a radical shake up the mortgage market, which will result in longer term fixed rate mortgages for twenty five years becoming the norm. Darling has been looking for a longer term borrowing solution for homeowners in light of the level of homeowners that have struggled to keep up with their mortgage repayments following higher interest rates.
At present fixed rate mortgages are generally taken over two, three, or five years, with the two year fixed rate proving most popular. Many consumers are nervous about fixing themselves into a particular rate for longer periods of time, and many lenders that have offered longer term fixed rates over the years have reported that the take up on these loans is usually low.
However, Darling stated that longer term fixed rates would provide increased security to homeowners, and added that he wanted to see ‘greater availability of affordable long-term fixed-rate mortgages’.
He added: ‘For many households, particularly those on low incomes, fixing the level of mortgage repayments for several years makes real sense. It can also contribute to wider macroeconomic stability.’
The chancellor has stated that he plans to reveal plans at his first budget that will encourage lenders to offer longer term fixed rate mortgages for twenty five years at reasonable rates of interest, so that they are more affordable for borrowers and will enable homeowners to enjoy greater financial stability and security.
Mark Wright
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