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April Mortgages and long-term fixes

ended 11. July 2024

April Mortgages are another new kid on the mortgage block offering long-term fixed rates, in their case of between 5 and 15 years. Newspage asked brokers for their views on the growing number of lenders offering these products to consumers. Are they seeing more demand for this type of loan? If not, why are more lenders going down this route? We also asked brokers for their thoughts on the timing of longer term fixes given that we are arguably now at the top of the rate cycle. Equally, as the fixed rate on offer with April Mortgages reduces automatically as the borrower enters lower LTV brackets, and there are no ERCs for people who move house or use their own funds to repay the mortgage, do brokers expect demand for these products to grow? Are these great value-adds and is this the kind of innovation the market needs? Their views are below.

10 responses from the Newspage community

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Ken James
Director at Contractor Mortgage Services
Longer term fixed rates have been missing from the landscape for some time and lenders like April are filling in a potential gap. Not every client is going to want a long-term fix, but if lenders like Perenna and April are able to support higher lending limits due the the security a longer term fixed period then it may entice some to the table. We now also have the likes of Virgin entering in with 10-year fixed rate Cashback options incentivising you to make energy-efficient upgrades to your home. Choice is a good thing as long as it's clearly explained to borrowers and they fully undertsand what it is they are taking onboard.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Long-term fixed rate products are not overly popular with borrowers at the moment given that most believe rates have peaked and will be reducing in the short to medium term. Reflecting that, even 5-year fixed rates are dropping in popularity. The key benefit to extra long fixed rate products is where they can assess differently on affordability given the long term stability in repayments, potentially lending more to perspective borrowers than from more mainstream products. Therefore, like all niche products, they will have a place and be suitable to some borrowers' circumstances, but I don't see these taking over the lending landscape anytime soon.
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Ben Perks
Managing Director at Orchard Financial Advisers
There are so many circumstances that can change in a 15-year period, so it is difficult to envisage many clients for whom this will be an attractive option. This is especially the case given that we are at the possible peak of the rate cycle. There are some redeeming features to April Mortgages' products, though: no ERCs in certain circumstances will excite some as will the automatic rate reductions as your LTV drops, although these are not likely to be market leading. One thing you can’t deny is that it offers long term certainty and if this is an absolute must have for the borrower, I’d consider placing them with April.
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Rohit Kohli
Director at The Mortgage Stop
We see a lot of interest from borrowers in these long-term fixes. However, in a market where rates are expected to fall, when we discuss the numbers they tend to get put off. The products themselves have a place in the market where lenders will offer to lend more for a long-term commitment and don't have unreasonable penalties for exiting after the initial period. April Mortgages have certainly listened to feedback on things like LTV by giving borrowers improved rates as they build equity in their homes. More of this type of innovation and development and I'm sure long-term fixes will grow in popularity.
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Justin Moy
Managing Director at EHF Mortgages
Innovation is high on the wish list of both borrowers and brokers, so any new-styled mortgage product is a welcome addition to our usual range of options. April Mortgages are the latest lender to feature in the longer-term fixed rate space, with the LTV automatically adjusting the mortgage rate as the loan is repaid. How popular these mortgage products prove will be really interesting to monitor given that current rate improvements will typically encourage short-term deals. There is definitely a space for this kind of mortgage, possibly due to enhanced affordability as much as for those worried about longer-term rate increases, or even changes in government. Thumbs up for the innovation.
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Dariusz Karpowicz
Director at Albion Financial Advice
This is a very unusual approach, and most clients wouldn't even want to think about or consider longer-term fixes. While long-term fixes are niche, the offering from April Mortgages, with rates between 5 and 15 years, could attract interest, especially since the fixed rate reduces as borrowers enter lower LTV brackets and there's no ERC for moving or early repayment. This flexibility and potential for lower rates are appealing features that could see demand grow. However, given that we're arguably at the top of the rate cycle, it remains to be seen if borrowers will flock to these products or if they'll remain a niche choice. Without a dramatic change in mortgage product design, I think very long-term fixes will stay on the fringes.
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Simon Bridgland
Director at Charwin Private Clients
You could have the best thing since sliced bread, but If borrowers can’t see it, how can they buy it? April Mortgages would like to change the mindset of UK borrowers to longer term deals, tempting them with trinkets such as no ERCs. But if the consumer doesn’t know about it, despite having some great features there won’t be the uptake needed to make it fly. Rates need to be competitively priced with current 5-year deals or they simply won’t get the uptake they need. Great idea but they need a loud hailer to get the point across to borrowers, especially amongst all the other media buzz.
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Craig Fish
Director at Lodestone Mortgages
Historically, we Brits like flexibility which is why fixed rates in excess of five years have never been a popular product. However, higher interest rates and stretched affordability have altered some borrowers' requirements. While we are not seeing huge demand for these longer term fixed rates, the idea behind them is a solid one and a popular choice overseas in Europe. If the higher interest rate environment persists, I expect the popularity of these products to grow.
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
It beggars belief that in Britain we do not seem to have too many choices for long term mortgage fixes beyond a 5-year term. Understandably, the mortgage broking community benefits from this somewhat as more often you need to renew your mortgage, the more frequent the mortgage broking and conveyancing sectors earn a living through fees. However, has nobody thought of the consumer stuck on a hamster wheel? Going around every few years on the remortgage hamster wheel that relatively shorter term fixes ends up producing. It is high time the FCA puts its money where its mouth is, and instead of bringing gimmicky 'Consumer Duty' guidelines, that it actually delivers for the end consumer by mandating lenders to have 10-, 15- and 20-year fixes.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
The biggest turnoff for most borrowers and advisers when it came to long-term fixed rates was the long tie-ins that came with them. Thankfully, product providers have listened and many of the newer breeds of products have no early repayment charges, or certain "break-out" clauses, which make the idea more palatable and less risky for people. The next hurdle is the same one all lenders face into: price. If the cost of a 10-year plus fixed rate is significantly more than a 5-year fixed rate, most people would take the 5-year, especially when all the talk is of rates falling over the coming years. Of course, if the cost of the longer-term deal is only a smidge more than a 5-year option, I can see several people taking that extra security and paying the premium.