30-year mortgages plea for families

Grant ShappsHousing minister Grant Shapps will call on lenders to consider offering fixed mortgages of up to 30 years to encourage greater market stability.

Mr Shapps will tell a seminar in London that he wants to spark a national debate on longer-term fixed mortgages as a "normal and sensible choice".
There are currently no mortgages with guaranteed lifelong interest rates and longer term deals often require hefty deposits.

Mr Shapps is expected to say: "In today's uncertain world, people want to know where they stand.

"Yet when it comes to buying a home, there are no mortgages available for them where they can fix their payments for a long time - the longest fixed-rate mortgage for many is five years.

"Longer term mortgages - possibly as long as 30 years - could help families on tight budgets know exactly where they stand when they're buying a home, by giving them greater certainty over how much they will be paying for their home in years to come.

"While they won't be right for everyone, lenders should start to look at the case for 30-year mortgages and how we can move to a more stable housing market where first-time buyers can get their first foothold on the property ladder at a cost they know they can afford."

Mortgage lenders have been slashing their rates as the Bank of England base rate remains at a historic 0.5% low.

The housing minister will argue that the certainty of longer-term mortgages can bring new funding into the market by offering a long-term fixed return for investors, and open up new finance to give first-time buyers and those without much equity in their homes a better chance of getting a foot on the ladder.

He will tell the Building Societies Association's Annual Mortgage Seminar that the Government wants to see stability in the housing market and with interest rates in the long term.

© 2011 Press Association
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