30-year mortgage terms 'could be impossible'
24th Oct 2011
It could be almost impossible for lenders to offer a 30-year fixed-rate mortgage deal with attractive terms in the current marketplace, according to one industry expert.
Ray Boulger, senior technical manager at UK independent mortgage adviser John Charcol, said this is probably not a feasible option at the moment.
His comments followed a speech by housing minister Grant Shapps at the Building Societies Association's annual mortgage seminar, where he called on lenders to consider offering more longer-term fixed mortgages of as much as 30 years.
Mr Shapps said this would encourage greater stability in the housing market as a "normal and sensible choice" for homeowners in the future, but Mr Boulger noted that long fixed-rate deals would be unlikely to have "huge take-up" if they were introduced in the near future.
"With the wholesale markets being as difficult as they are, to secure long-term funding would probably be a bit problematic for certain lenders. The reality is that the demand for this sort of deal is only there if the price and the terms are correct," the mortgage expert explained.
He added that the biggest challenge would likely be early repayment charges, as people do not like to be locked in to early repayment charges for too long.
If they can get the pricing and the rest of the terms right then there is some demand for these products, but the challenge in the current market is to get that right, Mr Boulger noted.
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