Lenders are ignoring demand from borrowers and brokers for longer term fixed mortgage terms suited to increasingly cautious clients.
Interest in five-year fixed-rate products has risen recently as buyers and remortgagers look for greater certainty in the face of Brexit and possible rate rises, leading a number of lenders to cut rates on the products.
Brokers have expressed an interest in offering seven-year options to clients, but the only products currently on the market – from Post Office Money and Bank of Ireland UK – are only available direct from the lender.
Tom Oliver, IFA at Newcastle-based Lamb and Associates, told FTAdviser: “I think there is demand for seven-year fixes for the more mature borrower. There is capacity in the market.
“At the end of the day, if you are talking about someone who has 10 years to go until the end of their mortgage, then a seven-year fix could be quite attractive. It depends what the affordability is and whether you can make overpayments.”
Mike Richards, director at London-based Mortgage Concepts Associates, said he had seen an increase in the demand for 10-year fixed rate mortgages as a result of turmoil in the market.
He added he would welcome the opportunity to offer seven-year fixes to clients. “I would say two years comes around pretty quickly,” he said. “Seven years is a pretty good term.”
Coventry Building Society launched seven-year fixed rate mortgages in 2016, but they were recently dropped as part of a review of the lender’s product rage.
Other lenders contacted by FTAdviser showed no signs of widening the range beyond the standard set of terms.
A Co-op Bank spokesperson said: "There are no plans to add longer-term fixed-rate mortgages to the mix of products available from The Co-operative Bank and Platform.
“We are working on ways to increase the choice of mortgages that we have to offer but it will be more focused on changes that will most appeal to first time buyers."
Aldermore, RBS, Metro Bank, Barclays and Skipton also stated that they were not considering broadening their product terms.
However Daniel Bailey, principal at Derbyshire-based Middleton Finance, was less enthusiastic about offering longer-term fixes.
“There is not really any demand beyond five years,” he explained. “Clients don’t see rates are going to go anywhere in the next couple of years – hence there are not many products available.”
He added that, at present, lenders tend to lock in for two-year deals before remortgaging onto a five-year rate.
simon.allin@ft.com
