British borrowers would opt for 25-year deals

A large proportion of British borrowers would opt for 25-year fixed rate mortgages, FairInvestment.co.uk claims.

The online finance portal has carried out research on customers’ appetite for 25-year deals, following chancellor Alistair Darling’s 2008 Budget speech last month, which encouraged lenders to offer longer term mortgages.

Darling has said previously that he wants people to have the choice of long-term fixed rate mortgages, because they “protect borrowers from risks and still allow them flexibility to move, or get a new mortgage if rates go down.”

He claimed short-term deals leave borrowers exposed to interest rate rises when their mortgage deal ends.

FairInvestment.co.uk has found that 37% of people would opt for a 25-year fixed rate mortgage and a further 28% would go for a medium term fixed rate deal.

A total of 25% say they would choose a short-term fixed rate and just 6% say they would not opt for a fixed rate at all.

The results are from its website poll, to which 151 people responded.

James Caldwell, director at FairInvestment.co.uk, says: “The fact that the majority of people would go for a long or medium term fixed rate mortgage is reflective of the country’s nervousness regarding the current economy and the credit crunch.

“At the moment, households are suffering from soaring mortgage repayments as they come off their fixed rate deals, and some might even lose their homes because they cannot keep up payments.”

He adds: “A long-term deal can provide people more security by reducing the risk involved with having a mortgage, which is particularly important for families with low incomes and for first-time buyers, who often have no or little equity.”