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Long fixes have appeal to public

Consumers find the idea of long-term fixed-rate mortgages attractive, according to London & Country.

Its financial survey shows that 63 per cent of consumers like the idea of long-term fixed-rate mortgages, indicating there could be a market for Chancellor Gordon Brown&#39s aim of encouraging long-term deals.

However, 37 per cent do not like the thought of taking out a long-term fixed deal, with 33 per cent of that group citing the level of interest rate, 31 per cent pointing to redemption penalties, 28 per cent saying they prefer variable rates with 8 per cent having other reasons.

But L&C says there has been poor take-up of the long-term deals available.

The research shows that 76 per cent stay in their homes between three and seven years, which could pose a problem when wanting to review a long-term deal. L&C says although long-term deals could be portable, there are no guarantees that a lender could offer a good rate on any top-up borrowing or lend additional funds. The borrower could end up having to pay a redemption penalty.

Mortgage specialist David Hollingworth says: “Clearly, narrowing the gap between the desirability and the suitability of these products will need to be a high priority for the Chancellor. In their current format, long-term fixed rates do not fit the bill.”

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