Following the Chancellor's Budget speech wanting to stabilise the housing market with long-term fixed rates, a number have now appeared on the market.
At least one mortgage lender has come out with an offering of 5.99% fixed for between 15 and 25 years. In principle, this could be the entire term of the usual borrowers' mortgage. The only problem is that these rates are not being snapped up as it was thought they would be.
Basically, borrowers seem to think they are too expensive and being locked in for 25 years raises concerns.
Our View
The idea of having a mortgage fixed at a certain rate for the whole term is very appealing, especially if you want to know your payments will stay the same.
The problem at the moment is that many borrowers have been used to fixed rates of around 3% or 4% for a certain period, returning to a Standard Variable Rate after a few years. This would generally be around 5.5%.
As people know that 5.5% is an average Standard Variable Rate at the moment they seem reluctant to lock into an even higher rate for upto 25 years at 5.99%.
However, as many know to their detriment, hindsight is a wonderful thing. Just think how you would feel if interest rates went back upto an average of 16% again!