Fixed-rate mortgage deals of 25 years 'lacked consumer demand'

Date:Tuesday 18th August 2009
Author: Susanna Kavka

Fixed-rate mortgage deals of two or three years are now the norm, but there was a time when people were encouraged to go for terms of up to 25 years, says a spokesperson from Moneynet.

The 25-year system worked well in Germany, according to Andrew Hagger from the financial comparison site, and "going back a couple of years", Gordon Brown was looking at promoting a similar model.

Mr Hagger claims there were a few long-term products released at the time but he claims people asked: "How can you fix for such a long period of time when rates are perhaps fairly volatile?"

He concludes that the appetite for borrowing over that length of time may not exist in customers and the majority have probably gone for fixed terms of between two and five years.

According to recent research by mortgage broker John Charcol, 83 per cent of clients opted for a fixed-rate mortgage in June of this year.