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Sunday 30th of August 2009
July 22, 2009    

Long-term fixed-rates disappear

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by Gill Montia

In a further reshaping of the UK mortgage market, the maximum length of a fixed-rate deal is down to 15 years, following Manchester Building Society’s withdrawal its 30-year fix.

Prior to the credit crisis, the Government was proposing to help lenders offer more affordable long-term fixed-rate products, which at the time were common in the US, Germany and Denmark.

Lenders were sceptical and pointed out that borrowers had concerns about being locked into loans that could prove costly.

Two years on and Moneyfacts.co.uk has reported that the eight lenders offering 25-year deals at the beginning of 2008 have all withdrawn from the long-term market.

According to the financial website, Britannia Building Society is the only lender still to offer 15 year deals, but with rates starting at an unattractive 6.49%.

The research also shows only nine lenders currently providing ten-year deals, with the majority of the market offering a maximum of five years.

Spokesman, Darren Cook, explains: “With so little funds available, lenders are concentrating on their core business of shorter term deals.”

He adds: “Borrowers currently do not want to be tied in to long term deals and instead prefer stability in the short-term, with the freedom to make crucial changes afterwards.”

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