New 50 year mortgage term enters market

As a growing number of homeowners seek to fix for longer to protect themselves from rising costs, a new mortgage lender has been granted a licence to offer 50-year fixed-rate mortgages

 

UK based specialist lender Perenna said it would initially launch 30-year loans before later rolling out longer terms, after being granted permission by the Bank of England. Rates are expected to be between 4pc and 4.5pc.

 

Perenna said it would launch its first loan in the next six months.

 

According to Twenty7Tec, a mortgage data firm, the number of people searching for 10-year fixes has risen by 54pc in the last year. Borrowers have tried to negate the effects of rising interest rates and soaring inflation by fixing their loans for longer periods.

 

However, as borrowers scramble to lock into fixed rates before they increase, many lenders have pulled dozens of longer-term fixes from the market. Data from analyst Moneyfacts showed that the number of 10-year fixed products within the marketplace has decreased from 180 in February, to 130 this month.  

 

Arjan Verbeek, of Perenna, said the lender was offering long-term fixed rates partly in response to inflation, but also to "improve affordability" for -prospective house buyers. Mr Verbeek said: "Rates are going up and it's eating into disposable income. There's real pressure on consumers and they need to appreciate what a fixed rate means. It means security – and that's very important."

 

Mr Verbeek also said the UK housing market was "way out of whack" with other countries such as Denmark and America, where longer fixed-rate mortgages are more common.

 

Banks in Britain usually provide fixed rate mortgages offering terms from 2 to 10 years, with two and five-year fixed deals being the most popular offerings. In July, Boris Johnson was said to be considering plans to allow house buyers to take out 50-year mortgages that they can pass on to their children, which would allow first-time buyers to take out "cross-generational" mortgages allowing them to borrow more money over a longer period.

 

 

Whitestone Solicitors

Rochdale