Chancellor pressing for long term fixed rate mortgages to be made available

 

March 31, 2008

Since Alistair Darling took over as the Chancellor of the Exchequer last year one of the issues that he has been addressing on a regular basis is the housing and mortgage market, and how increased stability can be brought to these markets. The chancellor has been stating for some time that long term fixed rate mortgages are necessary in order to bring stability to the markets, and this is something that he has brought up recently in his first budget.

Darling has stated that homeowner could really benefit from longer term fixed rate deals in the current financial climate, adding that these mortgages could provide increased stability and security for homeowners, as their repayments would remain the same for a far longer period of time than the current traditional two and three years fixed rate deals. The chancellor is pushing for an increase in the availability of affordable mortgages with rates that are fixed for twenty or twenty five years.

Although the chancellor has been pushing for longer term fixed rate deals to be available for some time, there are lenders that have expressed concern over introducing longer term fixed rate mortgages, stating that most consumers do not want to commit to a particular rate for such as long period. One industry official said: ‘It is extremely difficult to plan for what is going to happen 25 years or even ten years down the line. Borrowers like the idea of long-term stability but don’t want to be trapped for the long-term.’

In a recent report it was shown that last year only 3% of all mortgages taken out were for mortgages with rates fixed for ten years or longer. However, these mortgages are far more popular in other countries, with the uptake in countries like France and the United States standing at around 50%.

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Written by admin · Filed Under Fixed Rate Mortgages, Mortgages 

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