Nationwide has launched a 25-year fixed-rate mortgage following the Chancellor's announcement on Tuesday that the Government wanted to see more long-term fixed-rate mortgages as part of a strategy to improve affordability of housing.
The Chancellor, Alistair Darling, says that more long-term mortgage deals, of 10 years or more, are needed to prevent brokers and lenders from continuously charging expensive arrangement fees, which has a detrimental effect of affordability.
Nationwide originally offered a 25-year fixed-rate deal in March 2007 and sold £250m of long-term mortgages in just five weeks.
Five interest rate rises over the last 12 months, and a further rise to 6% expected by the end of the year, have left many homeowners struggling to make mortgage payments.
A long-term fixed-rate mortgage means that customers’ monthly payments will remain stable regardless of interest rate rises and they are likely to be popular given the current economic climate.
Stuart Bernau, executive director of Nationwide, says: “The Chancellor has recently expressed concern that most lenders do not offer long-term fixed rates.
"Our experience is that the 25-year fixed rate has a place in the market and offers long-term stability and flexibility for borrowers who want to protect against fluctuations in interest rates.”
The current offering from Nationwide gives rates from 6.39%, full portability and no early repayment charges after 10 years and is available for remortgages.
It is likely that more 25-year mortgages will become available in the coming months as lenders attempt to pre-empt any moves by the Treasury to improve the availability of long-term deals.
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