Government 'should incentivise' long-term fixes
04-Dec-2007
Long-term fixes could prove to be the
best first mortgage for many new buyers, but only if the government alters the way in which such deals are marketed, the Council of Mortgage Lenders (CML) has said.
The CML has revealed that its research shows that 42 per cent of the public would choose a fixed-rate
mortgage if they were choosing a deal right now, with 43 per cent of this group opting for a deal which lasted at least five years.
But lingering doubts over the lack of flexibility and the inability to make early repayments on many long-term fixed-rate deals mean that they are unlikely to become the
first time buyer mortgage of choice any time soon, the CML predicted.
"In the absence of a major policy intervention from the government, the take up of long-term fixed rates looks set to remain relatively small for the foreseeable future, and the most we are likely to see is some movement from short-term to medium-term fixed rates," noted CML head of research Bob Pannell.
"Measures that would trigger really significant demand for long-term fixed rates are potentially controversial or costly. But mortgage lenders' willingness to innovate in this product area suggests that they will be more than happy to meet such demand if it arrives," added CML senior policy adviser Rob Thomas.
The findings appear to contradict a recent study from Abbey Mortgages which suggested that one in three homeowners – equivalent to 5.1 million people – would opt for a fixed-rate deal for at least five years if they were to renew their mortgage immediately.
Long-term fixes 'will not help first time buyers'.
100% mortgage take-up doubles
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