More long-term mortgages available
Updated on 26 March 2008
The number of long-term fixed rate mortgage deals available has increased during the past year, but consumers are paying more for them, figures show.
There are now 132 mortgages available that are fixed for 10 or more years, accounting for 11.5% of all fixed rate home loans, compared with 112 or 8.9% of fixed rate deals in April 2007.
The increase in the number of long-term deals available comes despite a two-thirds drop in the overall number of different mortgages available due to the credit crunch.
But while the number of long-term fixes has increased, so have the rates lenders are charging for them, despite the Bank of England base rate being at 5.25% both now and in April 2007.
Homeowners wanting to fix for 10 or more years are now paying an average of 6.14%, rising to as high as 7.59%, compared with an average rate of 5.89% a year ago.
The Government is keen to encourage greater take up of long-term fixed rate deals as it believes these loans could benefit some homeowners, such as those on low incomes, by providing greater stability and certainty of mortgage repayments.
Chancellor Alistair Darling used his Budget to launch a consultation on how to encourage lenders to develop more affordable and flexible long-term deals.
Sean Gardner, of MoneyExpert.com, said: "Long-term fixed rate mortgages are here to stay. The Chancellor himself announced his support for lengthy fixed deals in the Budget and lenders have already started to react to demand by adding long-term products to their portfolios.
"However even though there is now more choice for homeowners, that choice also comes at a higher cost. Average rates on long-term deals are up, meaning the consequences of making such a big decision are even more severe.
"If interest rates start to spiral, you'll be laughing. But if they continue to drop then you could have saved money sticking to shorter term arrangements."
These news feeds are provided by an independent third party and Channel 4 is not responsible or liable to you for the same.
