No long term fixed rates please, we're British
Posted on 12 October 2007 by
So the government will be renewing its campaign to dispel the apathy felt by homeowners towards long term fixed rates - good luck, they are going to need it. In principal the idea that long term fixed rates will bring stability to the market is fair, but we are just too far down the "consumer is king" route to ever go back. Also lenders are not likely, unless there is a radical change to the market, to offer a long term fixed rates with no penalties for getting out of the deal and perhaps they shouldn't have to anyway. Lenders are, after all, businesses that have their own responsibilities and planning will be almost impossible should they offer good long term rates with no guarantee that the client will stay put.
Making the situation even less likely to happen is the belief that these types of mortgages are right for first time buyers. How many first time buyers stay put in their first house? I won't even bother to answer that one! The way current deals are structured means they would have to do just that or pay hefty penalties for gettng out.
Of course, the government says that reforms to the covered bond market will help the lenders offer more of these mortgages, but I think that is somewhat of an optomistic statement. Unless something really, really dramatic happens, long term fixed rates are just not here to stay.
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