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Writer's picturePaul Hoskin

Demand for long-term fixed mortgage rates is low.. will 20-30 year fixed products ever be a thing??


Customer demand for U.K long-term fixed rates is currently low. This is partially due to price and desire for flexibility, lenders have said.



Evidence was given by Andrew Asaam, homes director at Lloyds Banking Group, Charlotte Harrison, interim CEO of home financing at Skipton Building Society, Santander UK’s mortgage director Bradley Fordham, home commercial director at Nationwide, Henry Jordan, and Paragon’s chief executive Nigel Terrington over a nearly two-hour long session.


When asked why long-term fixed rates of 10 years or more were not as popular as the UK as in countries like the US, lenders said customer demand for these products had not been high.


Asaam said Lloyds Banking Group surveyed customers appetite for longer term fixed rates, and “customers come back and tell us about the desire for flexibility and the preference for the shorter-term products”.


“I think potentially due to the fact that shorter term products would have been the right thing to do over the last 10 to 15 years, because interest rates trended down or whether that changes.


“As we move through this interest rate cycle, we’ll need to wait and see. But the market for 10-year fixes, before we even think about 15 or 20 or 25 years, we think demand is for one or two per cent, low single digits. That’s reflective of the feedback we get from customers every time we survey them on products,” he explained.


Fordham said “brokers fulfil a really important role in the market” and they would put the customer needs first, and in some instances a long-term fixed rate would not be appropriate.


“It would depend on their situation. So as an example, if you’re a first-time buyer or you’re moving property, what’s most important may be how much you borrow rather than the actual rate that you pay, within reason, of course, and for a customer who’s coming to the end of their deal and is wanting a new product, it’s probably going to be about price,” he explained.


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