Consumer interest in long-term fixed-rate mortgages is on the rise, according to Cheshire Building Society.
CBS marketing director Jason Gaunt, speaking at the Marketing Week Mortgage Lending Strategy Summit in London last week, said there is a clear increase in demand from borrowers for loans fixed over a long period.
According to a survey in March by pollsters YouGov and Cheshire, 23 per cent of those questioned would consider taking out a 25-year fixed-rate mortgage – a significant shift from only 8 per cent in November 2003.
Gaunt said Cheshire has received 1,700 applications for long-term fixed-rate mortgages already this year.
His comments come despite the fact that few lenders are promoting the product. GMAC-RFC has recently removed its 25-year fixed-rate mortgage due to lack of demand and Standard Life Bank has not offered long-term fixedrate mortgages for the past two years.
Brokers such as Mortgageforce disagree with Gaunt's assessment of the market. They believe consumers are more interested in short-term fixed-rates than long-term rates.
Gaunt says: “Funding this product is tricky. We need to get a liability on the other side of our balance sheet. A 25-year long-term fixed-rate mortgage is too difficult for some of the bigger players, which partly explains their lack of presence.”
Mortgageforce senior business support manager Nichola Kitching says: “Although the public is sceptical about interest rates, consumers think much more short term these days with regards to most aspects of their life.”
Standard Life public relations manager Angus Macleod says: “At the moment, we do not regard the rates as being of value to the customers. It is a price-sensitive issue.”