Longer term fixed rate mortgage deals increase in demand.
Homeowners appear to be thinking longer term, as the lowest ever 10 year fixed rate mortgage deal sold out in just two weeks. The mortgage, which locked borrowers into a rate of just 3.99 per cent, was pulled by Norwich & Peterborough Building Society because of ‘unprecedented demand’.
Despite repeated political calls for more long term fixed rate mortgage deals they remain a niche product. At the time of the N&P launch many brokers commented saying that borrower up take would be low. It was felt that such long term deals would not work, borrowers would be put off by the idea of being locked in for such long periods with any early release being subject to a charge.
Brokers seem to have been proved wrong, more borrowers are considering 5 year fixed rate mortgage deals over 2 year fixed rate mortgage deals. Many home-owners are clearly showing a long term need for security which made the N&P 10 year fixed deal impossible to pass up. The remaining 10 year fixed deals left on the market are offered at around 5 per cent making them less attractive.
Britain’s mortgage thinking seems to be getting more long term which comes at a time when the lowest ever interest rate has allowed lenders to offer 5 year fixes at 3.5 per cent or below. The temptation with the N&P 10 year fixed rate mortgage was that at 3.99 per cent it was directly competing with the best 5 year fixed rate deals. Richard Barker, product manager at the N&P has said that at some time in the future the lender hopes to be able to return with a 'similarly competitive product.'
