Nationwide launches 25-year fixed rate mortgage
Nationwide Building Society has launched a 25-year fixed rate mortgage at 5.49%, which it is offering borrowers at a time when the Bank of England has made three rate rises in the past nine months.
The deal is available on a limited basis, as it has only £50m to allocate to the product, and with the average mortgage now standing in the region of £123,000 around 400 borrowers will be able to take one out.
Nationwide’s offer comes with a slightly higher interest rate than the current rate for a fixed rate homeloan, which according to the Council of Mortgage Lenders currently stands at 5.27%.
“Long-term fixed rate mortgages have been offered before, like the GMAC–RFC 25-year fixed rate three years ago,” said mortgage broker John Mitchell. “I’m not sure that these products suit most borrowers and those that have been launched in the past have not done very well.
“Still, at least this product has some flexibility and there are no early repayment charges levied on it after 10 years.”
HSBC, the High Street bank which also launched a 10-year mortgage three years ago, conceded at the time that “many borrowers cannot envisage what they will be doing in five years’ time let alone 10”. The product was not in great demand.