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Nationwide sets 25-year fix at 5.49%

Doubts over borrowers wanting to be locked in for so long

Nationwide Building Society has become the first major lender to offer a 25-year fixedrate mortgage at 5.49 per cent.

The launch comes as interest rates are expected to rise again from 5.25 per cent in the coming months .

The loan is welcomed by experts although questions have been raised about whether borrowers want to be locked in for so long.

There are no early repayment charges after the first 10 years and borrowers can overpay, underpay and take payment holidays. There is a res-ervation fee of 599, with a 200 discount for existing borrowers. The redemption penalty in the first 10 years is 3 per cent of the balance.

Other lenders offering similar deals are Cheshire Building Society and Kent Reliance. Newcastle Building Society offers a 20-year deal.

London & Country head of communications David Hollingworth says he expects more lenders to launch long-term deals.

He says: “I think it is an OK deal although I do not think people will want to be locked in for that amount of time.”

Moneyfacts mortgage analyst Julia Harris says: “Nationwide is reacting to an increase in demand for longer-term fixed rates due to recent rises in interest rates. It is nice to see the option of redeeming after 10 years without penalty.”

Nationwide executive director Stuart Bernau says: “It not only offers long-term good value to borrowers looking for the security of fixed payments but also the flexibility of a 10-year deal.”


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