Little choice for those wanting longer term fixed rate mortgages
April 14, 2008
Over recent months the Chancellor of the Exchequer, Alistair Darling, has been pushing for longer term fixed rate mortgages in the UK. Darling believes that longer term fixed rate deals for 20 or 25 years could help to bring stability to the housing and mortgage markets, as well as offering consumers peace of mind and security, as their mortgage repayments would remain the same throughout most or all of their mortgage terms, no matter what happened with interest rates.
However, recent research has revealed that there is very little choice available for those that want to take out longer term fixed rate mortgages, making it difficult for Darling’s idea to come to fruition. First time buyers in particular will have difficulties in getting this sort of special mortgage due the lenders requiring much larger deposits for their more competitive mortgage deals. Also, many lenders have been withdrawing their deals from the market rather than adding new ones.
Darling addressed the issue over longer tem fixed rates in his recent first budget, and he also drew up proposals to encourage lenders to offer this sort of mortgage. However, many lenders are wary because they state that most consumers in the UK prefer shorter term fixed rate deals, such as those for two or three years, as they feel that they may lose out of they take out a longer term fixed rate mortgage and interest rates then fall.
One industry official also warned that longer term fixed rate deals might not be the best choice, stating: “Certainty about monthly mortgage payments may be a good thing but borrowers should think very carefully before committing to 25-year fixed rates. The risks are clear. Not only could borrowers end up locked at a higher rate when interest rates are falling but could also find themselves having to pay redemption penalties if they want to move house.”
- Consumers could benefit from five year fixed rate deals A recent report has suggested that whilst many consumers are wary of taking on a very long term mortgage, as suggested by the Chancellor of the Exchequer, Alistair Darling, many could benefit from taking out
- Borrowers offered money from lender to redeem their loans Hundreds of borrowers who have taken their mortgages from the sub-prime lender, Edeus, which was set up a couple of years ago, are being offered money from the lender in exchange for redeeming their mortgage
- What to look out for when choosing a mortgage The world of mortgages has become something of a minefield in the UK over recent years. Not only are there more and more lenders offering a wide choice of mortgages, but the rises in property
- Are discount mortgages a good choice? From fixed rate mortgages to a tracker mortgage, and from interest only mortgages to buy to let mortgages, the world of mortgage loans has become more complex than ever these days, with a wide range
- Brokers report on new remortgaging trends A number of mortgage brokers have recently reported a new trend with consumers that are looking to remortgage. According to some mortgage brokers many of those that are coming to remortgage are opting for longer
Comments
Got something to say?