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Long term fixed rate mortgages disappear

Long term fixed rate mortgages disappear

Category: Mortgages

Updated: 04/08/2009
First Published: 22/07/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

While on the face of it Manchester Building Society withdrawing its 30 year fixed rate mortgage might not seem a big deal, its decision actually means that borrowers can no longer fix their mortgage repayments for more than 15 years.

It is a far cry from July two years ago, when the newly appointed Prime Minister Gordon Brown announced that more longer term fixed rate mortgages would help reduce the volatility in the housing market.

A raft of new deals offering a longer tie in period were introduced to the market after the announcement, with Cheshire BS, Kent Reliance BS and Manchester BS all launching 25 year fixed rate mortgage by the end of the month.

By January 2008, eight such products were available to consumers looking for a long term fixed deal, with Nationwide, Halifax and The Co-operative Bank all entering the market.

However, by January just Manchester BS, Scarborough BS and The Co-operative Bank remained. The former's announcement that they had pulled out of the market this week was the final nail in the long term fixed rate mortgage coffin.

"Raising the capital when interest rates are so low is difficult. Investors expect a higher rate of return than those currently being offered for terms of ten years plus, as the only way for the base rate to go from here is up," said Moneyfacts.co.uk spokesperson, Darren Cook.

"With so little funds available, lenders are concentrating on their core business of shorter deals.

"Britannia BS is the only lender to offer 15 year deals, but with rates starting at 6.49 per cent, these are likely to be unattractive to many borrowers."

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.