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Boom in demand for long-term mortgage deals

Monday, 28 July 2008 6:59 AM

Lenders are increasingly looking to long-term stability, offering borrowers an ever increasing number of mortgage deals of ten years or more.

The latest research from MoneyExpert.com finds the number of deals with a term of ten years or more has doubled in the past 12 months, and the ravages of the subprime mortgage crisis have continued to sweep the market.

As a result, mortgage products of 120 months or more has increased from eight per cent of the market in July 2007 to 15 per cent today.

Furthermore, analysis shows that there are now 18 different 25-year fixed-rate deals on offer from five different providers. In July 2007 there were only nine such deals on the market.

"The credit crunch has prompted a flight to safety by borrowers who have been stung by dramatic rises in the rates on short-term deals.

"At the same time lenders are increasingly keen on signing customers up to long-term deals which offer them certainty," explained Sean Gardner, director of MoneyExpert.com.

The shift to long-term deals is emphasised by the dramatic drop in the number of mortgages on the market.

While the total number has slumped by 647 products over the last 12 months - a shrinking of some 41 per cent of the market as a whole - the number of long-term mortgages has increased from 127 products in July 2007 to 137 now.

However, the deals are not immune to the impact of the credit crunch.

While this time last year the average mortgage charged on a 25-year deal was 6.38 per cent, it has now risen 6.56 per cent.

"Long-term fixed-rate mortgages are no longer an oddity. And with competitive rates of interest in some circumstances they may well be worth considering," concluded Mr Gardener.

Chris O'Toole

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