30 Year fixed rate mortgages may be introduced
15/09/2014
30 Year fixed rate mortgages could be introduce as a product for first time buyers in the next few months.
30 year fixed rate mortgages would offer consumers the chance to lock in their mortgage rate for the rest of the term. The longest deals available at the moment are 10 year deals, but the most popular are two and five year deals.
Ray Boulger, of broker John Charcol, said “There is every likelihood that we will see some lenders offering 20, 25 or 30-year deals by the end of the year”.
Long term mortgages have never really been that popular in England, as they were expensive for lenders to offer and came with fees and penalties for borrowers wanting to end the contract early, usually a percentage of the loan which could be as high as 6pc. This may be a thing of the past now, due to market expectations meaning a rate rise is some way off.
For this type of mortgage to take off, lenders would need to reduce or remove early repayment charges, so borrowers would have the opportunity to move house, repay the mortgage quicker or remortgage. Mr Boulger said. “Lenders could offer competitive deals that really appeal to borrowers who are worried about interest rate rises and want long-term certainty over their repayments.”
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