Government supports fixed rate mortgages to reduce debt

At present, mortgages fixed at a certain rate of interest for five years or more account for just eight to ten per cent of the total UK market, with the vast majority of under ten years in duration, according to the Council for Mortgage Lenders (CML).

While deals of 15 years or over are common throughout Europe and in the US, in the UK just four lenders offer products of 25 years or more, a situation prime minister Gordon Brown has been keen to address.

It is hoped that the moves will help to reduce the amount of people who take out mortgages only to find themselves getting into considerable debt because of subsequent increases in interest rates.

The developments come as the UK’s biggest remaining building society, Nationwide, announced that it is to launch a new 25-year product in reaction to customer demand.