A new mortgage product fixed between 10 and 40 years has been launched by mortgage broker and buyer service Habito.
The product, known as ‘Habito One’, is not subject to early repayment charges at any point, while monthly payments remain fixed throughout the lifetime of the mortgage.
Daniel Hegarty, founder and CEO of Habito, says “The mortgages we have available to us today are remnants of a different age and a different power dynamic between customers and lenders.
“The future has never been less predictable and we need our homes to provide us with safety and financial security.
“The vast majority of us on a mortgage that’s fixed for two to five years are effectively trapped in a system that doesn’t fit our financial future or our home-buying habits. Worse still it demands that we continually switch to a new product before we get stung by a higher rate.”
While long-term fixed rate mortgages are commonplace in countries such as the US, Denmark and France, they are a new concept in the UK.
Habito says its research revealed that some 30% of UK mortgage-holders would be interested in switching to a long-term fixed rate deal. When asked why, many said that they would be enticed by the flexibility, certainty and protection against interest rate rises that this would offer.
The mortgage rates offered by Habito One begin at 2.99% and are fixed from start to end.
Homebuyers have a range of loan to value (LTV) options available to them through Habito, ranging from 60% up to 90%. In addition, it plans to introduce 95% LTV mortgages later this year.
In response to the launch, Colin Bell, chief operating officer of Perenna, said: “We believe that long-term fixed rate mortgages are the future of Britain’s housing market. These products will ultimately give more people the opportunity to step onto and up the property ladder.
“The traditional two- or five-year approach to lending is not working for many borrowers. Long-term fixed rate products, without the risk of reverting to SVR, offer a viable alternative. Habito’s long-term proposition is a step in the right direction for the market.
“Perenna will be launching its own range of fully scalable, flexible fixed for life mortgages at competitive rates later this year – providing borrowers with both certainty and flexibility. Our aim is to develop a mortgage market that works for borrowers and allows them to access the funding they need for the homes they really want.”