Shapps calls for 30-year mortgages
The housing minister, Grant Shapps, turned to Gordon Brown for inspiration yesterday. Talking to the Building Societies Association Mr Shapps called for lenders to offer 30-year fixed rate mortgages, an idea first floated by Mr Brown in 2003.
As happened then, lenders were dimissive of the idea. Mr Shapps claimed longer-term loans would ensure "people know where they stand". They would also bring new funding into the market by offering fixed returns for investors.
But Paul Broadhead, head of mortgage policy for the BSA, pointed out: "Longer-term fixed rate mortgages have been offered in the past but with limited consumer demand."
Meanwhile, the Council of Mortgage Lenders said that about 1.8 million people who have come off fixed rates are about £2,600 a year better off. The CML's director-general, Paul Smee, said: "The choice of whether or not to fix involves taking a view about the likely direction of future interest rates." CML research shows that borrowers are cautious about long fixed rates, worried that they may end up paying over the odds.
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