GMAC-RFC has pulled its innovative 25-year fixed rate mortgage, blaming rising swap rates and lack of demand just two months after its launch.
Despite garnering publicity in the national press the deal ultimately failed to deliver volume sales.
When the product was first released in February it was hoped it would help make longer term fixes more attractive in the wake of the Miles review.
As part of the mortgage, borrowers would pay no more than 5.95% for the next 25 years on the fixed rate element.
This could then be combined with a penalty-free base rate plus 0.75% tracker in five customised options.
Jeff Knight, head of sales and marketing at GMAC-RFC, says: “Swap rates went up recently and GMAC-RFC has had to reprice all its fixed rates. The product was designed to test the demand for this sort of mortgage.”
The company says that while it remains committed to developing products it has no plans to re-enter the 25-year market in the short-term.
Rob Clifford, managing director at mortgageforce, says: “There is mass disinterest in long-term fixes and I don't expect any lender who designs such products to see significant business volumes.”
And Tim Dawson, chief executive at Mortgage Express,adds: “I don't think the current shape of the market and attitude of customers sits well with a 25-year mortgage. The only way to offer a 25-year deal is to price it so competitively that you'd be a fool not to take it.”