Nelson Mortgages

The Chancellor of the Exchequer, Alistair Darling, is still pushing for lenders to introduce long term fixed rate mortgages in light of the current crisis, where many consumers are facing crippling mortgage repayments once their existing cheap fixed rate comes to an end. The chancellor has been pushing for this type of mortgage for some time, and in his recent first budget he addressed the issue, urging lenders to introduce more affordability and accessibility when it comes to longer term fixed rate deals.

Darling feels that fixed rate mortgages for twenty or twenty five years will enable consumers to enjoy increased peace of mind and security, enabling them to enjoy static repayments for most or all of their mortgage term. He added that in addition to improving things for homeowners these longer term fixed rate deals could also help to ease the problems in the housing and mortgage markets.

Although Darling has now put together a proposal for the mortgage industry outlining the benefits and implementation of long term fixed rate mortgages, many industry professionals are not convinced that the model will work. Most consumers that take out fixed rate deals only fix the rate for two or three years, as they do not want to commit to a particular rate over a longer period.

One industry official stated: ‘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.’

However, Darling want the industry to look at longer term fixed rate mortgages abroad, where they are far more popular in some countries than they are in the UK.

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