Woolwich introduces longer term fixed rate mortgage

Over recent months the Chancellor of the Exchequer, Alistair Darling has been calling for longer term fixed rate mortgages to be introduced, claiming that these mortgages could help to bring stability to the housing and mortgages sectors and could provide security and peace of mind to homeowners.

Darling addressed the issue in his recent first budget, and has even drawn up proposals to encourage lenders to offer this sort of longer term fixed rate deal, stating that these mortgages work well in other countries.

In a recent announcement the Woolwich has stated that it will now be offering one such mortgage, and this will be in the form of a ten year fixed rate mortgage, with a fixed rate of 5.29%, which is only marginally over the current base rate.

This is a deal that could appeal to those due to come off cheap fixed rate mortgages in the coming weeks, although it is for a lower period than the 20 and 25 year fixed rate terms that Darling has been calling for.

However, unfortunately there is a catch – in order to qualify for the mortgage borrowers must put down a deposit of 40%, as the mortgage has a 60% loan to value ratio, and this means that it is not going to be suitable for first time buyers who do not have a large deposit to put down.

However, it may suit those that are selling their homes and moving to another property, as they can use the equity from their previous homes to put down by way of a large deposit.

An official from the Woolwich stated: “The mortgage market is hugely uncertain at the moment and lenders are continually re-pricing products. However, the long-term swap market has steadied at lower levels and we have been able to put together a long-term product at a historically very competitive rate.”