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GMAC-RFC scraps 25-year fixed rate loan after just two months

Lender GMAC-RFC is dropping its 25-year fixed rate mortgage product after just two months on the market, blaming a lack of interest from borrowers.

GMAC-RFC offered the loan at 5.49 per cent but, despite an enthusiastic launch, marketing director Jeff Knight says the product just did not pick up enough interest.

The company says swap rates moving upwards finally persuaded it to abandon the product rather than reprice it.

GMAC&#39s departure leaves Leeds & Holbeck and Cheshire Building Society as the only players with 25-year fixes in the market. Both have said that they have no plans to withdraw these projects from the market.

The decision deals another blow to Chancellor Gordon Brown&#39s vision of creating a market for longterm fixed-rate mortgages in the UK to bring it in line with other European countries.

Knight believes that long-term fixes may never take off in the UK. He says that most borrowers are still looking for more flexibility and are afraid of being locked into long-term deals.

He says: “This was a market test. There was only one way to find out about the appetite for long-term fixes and we have taken the view that the market is just not ready at the moment.”

London & Country mortgage specialist David Hollingworth says: “I think this shows that barriers remain and there is no easy answer for long-term fixes. UK borrowers are just not interested in looking at longterm products. They want flexible arrangements and the whole market has moved in this direction.”


Abbey – Reward Mortgage

Type: Tracker mortgage Tracker term:Lifetime of loan Tracker rate: 1.24% above Bank of England base rate Payable rate: 5.24% Minimum loan: £6,000 Maximum loan: Up to 95% of valuaiton subject to a maximum of £1m Income multiples: Up to three times principle income plus second or 2.5 times joint Conditions: 1% cashback every two years […]

Annuity edge

With a savings gap of £27bn in the UK, the current generation of working-age people are not making proper provision for their retirement, particularly woman. The ABI&#39s pensions and savings index shows that 46 per cent of working women are not saving enough for their retirement. Demographic projections reveal a serious problem for most developed […]

Millfield raises £3.6m for working capital

National IFA Millfield Group has raised £3.6m from City investors, underwritten by brokers Collins Stewart to provide working capital. A trading update from the firm said it had grown its advisers numbers by 25 to 625 in the six months to March 31, 2004, although 90 RIs left during that period. The firm says average […]

Forbes to help firms face up to pension changes

Alexander Forbes Financial Services has set up a fully integrated client sales, service and administration team to deal with advice issues in the run-up to A-Day for pensions. The new structure combines all of Alexander Forbes&#39 services, including sales, customer services, actuarial, group and executive consulting, into client-focused teams. The firm says the teams will […]


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