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Longer-term fixed mortgages - should the UK look to Europe?

Journalist: Jane Matthews, FTAdviser

ended 28. June 2023

Hello newspagers, 

Curious to hear what you think about longer-term fixed mortgage terms.

Obviously now would not be the right time to fix for a period of ten years or more, but do you think the UK mortgage system could do with moving towards a market where longer-term fixes play a more significant part in the future? 

The argument being that it would provide more certainty for borrowers, even if the interest rate was higher than on a shorter-term fix. 

Before this period of high interest rates, did you have many clients interested in longer-term fixes? Hindsight is a great thing, but do you think more people should have gone for 10+ years of a fix in the last decade? Was there even the lender choice for this? 

Many thanks, 
Jane

5 responses from the Newspage community

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Editor
Justin MoyVerified
Managing Director at EHF Mortgages
Longer Term fixed rates have traditionally come with longer-term penalties if you need to exit the mortgage early, so they have been inflexible - hence the popularity of the shorter-term deals, as many like to refinance, move home or improve their property, and that short-term review makes it easy to do this, without stiff penalties. We would need to see a fundamental change in how mortgage products are designed, moving in the direction Kensington tried last year with their longer-term effects. If there was a balance between flexibility, stability, costs and exit where necessary, we could see more recommendations. But when you look at say a 10yr Fixed deal for First Time Buyers, who may split in 2 years, and they face a 6-7% early repayment charge to break their mortgage deal early, you can see why that deal will not work.

More innovation, look at the flexibility and watch the fees.
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Dylan Kenney0
Mortgage Broker at Henchurch Lane Financial Services
The ability to budget, having peace of mind and the stability in your mortgage rate being unaffected as you have locked in a longer-term product are wonderful things however with generally higher early repayment charges, a lesser ability to review your mortgage more freely when the things you cannot foresee in life occur have acted as a deterrent for borrowers in recent years looking at longer-term products. Whether you should fix for any period is down to personal circumstances in every case, which is why speaking with a whole of market professional who can help evaluate your situation could be the difference between spending or saving hundreds, or thousands of pounds.

Longer-term products aren't offered by all lenders which can ultimately limit choice, criteria and rates to choose from however it can still be seen as a competitive market with quite a few of your high street lenders having a foot in the longer-term fixed propositions.
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Graham CoxVerified
Director at Bridging Hub
Borrowers had understandably become complacent about ultra-low mortgage rates. The only deterrent to fixing for a long period of 10 years or more was the early repayment charges, which can amount to thousands of pounds if you redeem your mortgage early. Other than that, fixing at 2-3% for 10 or even 15 years was the steal of the century. Particularly when you add up all the product fees, valuation fees, and potential legal costs of remortgaging every few years.
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Rob Gill0
Managing Director at Altura Mortgage Finance
Long-term fixed rates are commonplace in much of Europe and the US, giving borrowers the piece of mind of a stable rate on their mortgage for 10, 20 or even up to 30 years. Crucially, these products come with limited or no early repayment charges, removing the main barrier to longer-term fixes in the UK where fixed rates typically have substantial penalties for redemption during the fixed rate period. The evolution of the UK market in this direction is long overdue and the industry should seek to learn from highly successful, popular products used widely in other countries.
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Austyn JohnsonVerified
Founder at Mortgages For Actors
2 years ago, I looked at buying a house in Italy. 2% fixed for life. Fixing for life is very common there, how i wish I had taken it up!
If the UK can afford fixing deals for life, the troubles with affordability at remortgage time are gone. I know, shooting myself in the foot there, but if its the best course of action...