Long-term fixes continue to miss their consumer target in the UK despite persistent endorsement from the government. While the political will is strong to use long term fixes as a way of curbing our volatile mortgage market, consumers remain to be convinced.
So, with Cheshire's current 25-year fix the last man standing in a field desperately short of contenders, there were positive noises this week in reaction to the proposal for a US-style federal mortgage fund. Modelled on Fannie Mae and Freddie Mac in the US, the European Mortgage Finance Agency is the product of a coalition of five continental lenders. Although in its infancy the long-term fix scheme has the potential to deliver cheaper rates with no early redemption penalties.
So Mortgage Strategy asks – would the scheme appeal to the costconscious UK consumer?
Andy Wilgoss, managing director, Square Mile Mortgage Finance
This type of product could help fulfil Gordon Brown's aim of ending the UK's boom and bust cycle. In the current climate a 4.99% 20-year fix that is portable and has no penalties and a realistic arrangement fee would sell.
Simon Tyler, managing director, Chase De Vere
Until you get flexible long-term fixed rates at a competitive price, they don't stand a chance against discounts. When people open their wallets they always go for the cheapest deal.
Jonathan Cornell, associate director, Hamptons International
Whilst it might be desirable, in my view there are just too many squables between banks and even countries for this scheme to work in practice.
David Hollingworth, mortgage expert, London & Country
It would be a giant leap forward for the long-term fixed rate market. It only remains to see what sort of rates we are talking about.
Philip Ambler, broker, Goodmortgages
This sounds like an influential consortium. If it hits the UK market, I think it will be a big player.
Mike Fitzgerald, sales director, Brentchase Financial Services
Anything that could calm the volatility in mortgage rates would be welcome. However, take-up of fixed rate deals has been embarrassingly low so far. If they could make this like Fannie Mae, they could be onto a winner.
Ray Boulger, senior technical manager, Charcol
As far as the UK is concerned it's a bit of a non-starter unless there is some sort of huge subsidy from the EU. If it could have happened without that it would already have been done.
Kevin Morgan, managing director, EZI UK
As a concept it sounds appropriate. If redemption penalties are not severe it could be something that consumers should think about.
Mark Osland, director, Fidelius
Any idea to give consumers a better deal is worth listening to. But while the American model has its attractions, it actually means higher rates than we're used to in the UK.
Kevin Paterson, managing director, Park Row Independent Mortgages
Anything that introduces greater competition in long-term fixed rates is a good thing.