Industry responds to UK’s longest fixed-rate mortgage

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From March 15, first-time buyers, movers and mortgagees in England and Wales will have access to mortgage products for up to 40 years with Habito.

Martin Stewart, Director of The Money Group, said: “This is an exciting Habito initiative and while there is a need for innovation within the industry to cope with the changing demographics, j I will need a little conviction to say this is the right product. “

Stewart went on to point out that Gordon Brown has tried to change the culture of shorter-term fixed rates and that has failed to gain traction.

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He said: “Personally, I have only implemented one 10-year fixed rate in the past five years, so where the demand for this type of product is coming from is not immediately clear to me. “

“If I were a consumer looking at mortgage rates at the lowest in 300 years, I would wonder if we are likely to see a back-to-back round of 22 base rate hikes of 0.25%, which would have to happen for that to happen. my 5% are long. fixed rate term value for money.

Stewart believes there will soon be inflationary pressures due to the volume of government stimulus.

He added: “Managing this with an arguably over-leveraged economy that will not be able to withstand higher interest rates is going to be a difficult task.

“I continue to maintain the same position I have since 2008, we are in Japan, but with substandard sushi.”

Mike Brown, director of Crystal Clear Financial Services, also thinks the launch of a 40-year term mortgage is interesting, however, he doesn’t think the rates are convincing enough that consumers want to lock in during that time.

He added: “The rates also seem less attractive than the current variable rates of some lenders, not to mention the 10-year fixed rates.

“While the products don’t appear to have a prepayment charge, I’m also puzzled as to who their target market is at these rates. “

Brown went on to say that he could see that Habito was trying to disrupt the short-term fixed and mortgage market, but he thinks it looks like a launch without an audience.

Nick Morrey, Technical Product Manager at John Charcol, also looks at prepayment charges and said: “The obstacle to any success / adoption of long-term fixed rates has often been ERCs.

“In fact, I’ve told several lenders over the years that if they want to release a 10-year fixed rate, they have to lower / lower ERCs.

“So this is one of the few pieces missing from what lenders are offering to the public and some will no doubt embrace it.

However, Morrey explained that there is a significant difference between a 5 year fixed rate, and therefore he thinks the cost is likely to be too high for most.


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