Habito launches 40-year fixed rate mortgage

Habito launches 40-year fixed rate mortgage
Credit: Chris Ratcliffe/Bloomberg

Online mortgage broker and lender Habito is launching a long-term fixed rate mortgage with a maximum deal period of 40 years.

The product, called ‘Habito One’, will be available via Habito next week (March 15) and offer a fixed rate period between 10 and 40 years to first-time buyers, homemovers and remortgagers in England and Wales.

According to Habito, the mortgage will have no early repayment charges or exit fees, enabling customers to safeguard against future interest rate rises, while maintaining “flexibility and freedom” over their home finances.

It added that the product would remove the need to remortgage every two to five years, which Daniel Hegarty, founder and chief executive officer of Habito, described as “costly, time-consuming and repetitive”.

Rates for the Habito One product will start at 2.99 per cent at LTVs ranging from 60 to 90 per cent, with plans to introduce 95 per cent LTV products from the summer.

Product fees are applicable when the borrower takes out the mortgage or increases their borrowing.

According to Habito, an October survey of 1,480 homeowners and its customers found three in 10 (30 per cent) said they would be interested in switching to a long-term fixed rate mortgage for flexibility, certainty and protection against interest rate rises.

The Habito One product will be available exclusively via Habito but could become more widely available in future like its buy-to-let products, according to Martijn van der Heijden, chief financial officer at Habito.

Kevin Roberts, director at Legal & General Mortgage Club, commented: “We should always welcome genuine innovation in the mortgage market and we welcome this initiative from Habito offering a fixed rate mortgage for as long as 40 years.

"Not only does the launch boost product choice for consumers, but long-term mortgages also have the potential to be a viable route for many buyers to help them achieve their housing ambitions.

“That said, borrowers have so far taken little interest in existing long-term fixed rate mortgages and it remains to be seen just how popular Habito’s new product will really be."

Speaking to FTAdviser, van der Heijden also acknowledged the potential negative impact on demand for advice from mortgage brokers if long-term fixed rate products such as Habito One became more widely available from other lenders.

But noting Habito’s “unique” position as both a broker and lender, he said: “For our business model, it doesn’t matter that much.”

Pricing table: Habito One

Mortgage term (years)10–1516–2021–2526–3031–3536-40*
Product fee£1,995£1,995£1,995£1,995£1,995£1,995
60% LTV2.99%3.29%3.49%3.59%3.84%4.20%
75% LTV3.29%3.39%3.59%3.69%3.94%4.30%
80% LTV3.59%3.69%3.84%3.94%4.19%4.55%
85% LTV3.89%3.99%4.14%4.24%4.49%4.85%
90% LTV4.39%4.49%4.64%4.74%4.99%5.35%

*Indicative rate correct as of 8 March 2021.

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