Just six out of 90 mortgage firms offer 25-year or longer deals, says mform.co.uk

Long-term fixed rate mortgages are potentially risky for borrowers who could be stuck in expensive deals when interest rates are falling or have to pay high redemption penalties to move house, online mortgage company mform.co.uk warns.

And currently just six out of 90 lenders offer fixed rates for 25 years or more despite Chancellor of the Exchequer Alistair Darling’s call repeated in today’s Budget for more long-term deals to be offered, analysis from mform.co.uk shows.

Mr Darling launched a Treasury consultation on long-term fixed rate mortgages which will report back in the autumn. And in his Budget speech he said “more people should have the chance” to take out long-term fixed deals.

mform.co.uk figures show lenders with 25-year deals direct to the public include Norwich & Peterborough,, Kent Reliance, Nationwide, Co-Operative Bank, Cheshire and Manchester which also offers a 30-year deal.

Homebuyers in the Chancellor’s Edinburgh constituency can only choose from four lenders as Kent Reliance and Norwich & Peterborough do not offer loans in Scotland.

Francis Ghiloni, mform.co.uk’s Marketing and Business Development Director, said: “Certainty about monthly mortgage payments may be a good thing but borrowers should think very carefully before committing to 25-year fixed rates.

“The risks are clear. Not only could borrowers end up locked at a higher rate when interest rates are falling but could also find themselves having to pay redemption penalties if they want to move house. It is virtually certain that people’s circumstances will change several times over a 25-year period.

“It will be interesting to see what comes out of the Treasury review as all the evidence so far is that the mortgage industry does not appear to share his ambition for such long-term fixed-rate deals.”

mform.co.uk’s analysis shows rates on 25-year fixed deals available direct to the public currently range from 5.5 per cent to 6.58 per cent. Best rates for two-year deals range from 4.75 per cent to 5.50 per cent.

[b]
about[/b]
mform.co.uk offers a unique free service linking mortgage customers directly to the application systems of lenders. It is the only website which allows borrowers to search the whole market for the best products ranked on true cost and to apply directly to lenders.

The service is completely independent and is not influenced by commercial deals or advertisements. There are no distracting sponsored links and borrowers can also research mortgage product features and lenders’ service levels.

mform.co.uk works with lenders by enabling them to link with informed mortgage customers and by reducing lenders’ costs allows them to pass on savings to customers.

The service, which is free and easy to use, can be found at www.mform.co.uk.

Notes:

mform.co.uk’s own analysis March 12th 2008 based on a £150,000 mortgage secured on a property valued at £250,000 purchased in England.

For more information:
mform.co.uk: Francis Ghiloni/Gordon Swan 0131 556 4845
Citigate Dewe Rogerson