"Consumer demand is largely for initial fixes of under five years, with 97 per cent of fixed rate mortgages taken out on these products with building societies.”
The spokesperson added: “Additionally, the Scandinavian countries use matched funding (usually covered bonds) to provide the longer term rates, whereas this source of funding is less common in the UK."
According to Moneyfacts, the only lender in the UK that offers any fixed for life products is Kensington Mortgages.
While the number of lenders who offer 10 year fixed-products is much greater, FTAdviser reported that at the end of May many had begun pulling them from the market as interest rates rose.
This week there was 145 10 year fixed-rate products available on the market, down from 169 in mid-May.
Brokers’ views
Henchurch Lane Financial Services mortgage broker, Dylan Kenney said that while the ability to budget, the peace of mind and the stability offered by long-term fixes are “wonderful things”, higher early repayment charges on longer-term fixes are generally off putting for borrowers.
As is the “lesser ability to review your mortgage more freely when the things you cannot foresee in life occur”.
“Whether you should fix for any period is down to personal circumstances in every case, which is why speaking with a whole of market professional who can help evaluate your situation could be the difference between spending or saving hundreds, or thousands of pounds,” Kenney added.
Others in the sector agreed that the inflexibility of longer-term fixes are what make them unattractive to many in the UK.
We would need to see a fundamental change in how mortgage products are designed, moving in the direction Kensington tried last year with their longer-term effects,” Justin Moy, managing director of EHF Mortgages said.
Moy gave the example of a romantic relationship not working out as an example.
“If there was a balance between flexibility, stability, costs and exit where necessary, we could see more recommendations.
"But when you look at say a 10 year fixed deal for first time buyers, who may split in two years, and they face a 6-7 per cent early repayment charge to break their mortgage deal early, you can see why that deal will not work,” Moy said.
Graham Cox, the founder of SelfEmployedMortgagesHub.com said that in hindsight, fixing for 10 or even 15 years was the “steal of the century”, with the only downside being the early repayment charge.
“Particularly when you add up all the product fees, valuation fees, and potential legal costs of remortgaging every few years,” Cox added.
Rob Gill, the managing director of Altura Mortgage Finance noted that these early repayment charges are not a feature of many of the long-term fixed rate products across Europe.
