He believed longer-term fixed rate deals reduced volatility in the housing market and offered help to lenders for the development of such products.
However, in June 2007 there were more than 85 fixed-rate mortgages with terms of between 10 and 30 years and today, with the New Labour government a dim and distant memory, home loans fixed for as long as 10 years remain in short supply.
In January 2008 there were eight lenders offering 25-year deals. This reduced to just three lenders by the start of 2009, as it became increasingly clear that Mr Brown and his government were in trouble.
Bob Pannell, head of research at the Council of Mortgage Lenders, said in 2007: “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.”
Some lenders would argue the reason they do not produce more long-term deals is because most borrowers prefer to think short-term. But surely with so many bills soaring, the opportunity to have one monthly outgoing remain at the same level for many years is increasingly tempting?
This guide tackles the pros and cons of long-term fixed rate mortgages, how to make sure you get the best deal for your client and who should contemplate taking on one of these home loans.
Supporting material for this guide comes from the Council of Mortgage Lenders’ research; the Financial Conduct Authority; the Bank of England; Ray Boulger, senior technical manager of John Charcol; David Hollingworth, associate director of London & Country Mortgages; Jemma Anderson, product manager for Accord Mortgages; and Phil Cliff, director of mortgages for Santander for Intermediaries.