Long-term mortgage deals have become popular with both lenders and borrowers since the onset of the credit crunch, with market share doubling over the past year.
Research from MoneyExpert.com suggests borrowers are choosing long-term stability after remarkable volatility in the price of short-term mortgages.
The proportion of fixed rate mortgage deals with a term of at least ten years almost doubled from 8% in July 2007 to 15% this month.
Part of this is a result of the rapid shrinkage in the UK mortgage market as banks become more reluctant to lend, and the actual number of deals has only grown 8% to 137.
Sean Gardner, director at MoneyExpert.com, says: “The credit crunch has prompted a flight to safety by borrowers who have been stung by dramatic rises in the rates on short-term deals.
“At the same time lenders are increasingly keen on signing customers up to long-term deals which offer them certainty. Long term fixed rate mortgages are no longer an oddity.”
The cost of 25-year and 10-year fixed rate mortgages has grown in recent months, but the average 25-year deal is still 0.3% cheaper than the average for all fixed rates.
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