Standard Life Bank has introduced Futureperfect, the UK's first 25 year capped rate mortgage.
Futureperfect is capped at a rate of 6.25 per cent for the life of the loan. However if the combined average of the standard variable rates of the Halifax, Abbey National, Cheltenham & Gloucester and Standard Life Bank falls beneath 6.25 per cent, then the interest rate of Futureperfect will match this average.
Standard Life Bank says the product is aimed at customers who like the stability of the 25 year term and are attracted by the fact that the capped rate will give them a set level above which mortgage payments cannot go.
Although the concept of a 25 year capped mortgage is common in the USA and Europe, UK lenders have not been able to offer this type of product because of the instability of interest rates in the past. It has only been in the last five years that the UK has enjoyed a more stable interest rate environment, which makes it an ideal setting for this type of product.