moneysupermarket comments on Government's plans to encourage longer-term fixed rate mortgages

Commenting on the Government's plans to encourage longer-term fixed rate mortgages,Louise Cuming, head of mortgages at price comparison site moneysupermarket.com, said:

"The fact the Government is pushing long-term products demonstrates a fundamental lack of understanding of the current mortgage market".

""Longer-term fixed deals may offer some protection against rising interest rates.

They may seem an attractive alternative to hunting for a new mortgage every two to three years or an appealing way to avoid ever-increasing fees associated with taking out short-term fixes.

However, it is important to understand the risks of locking into any financial product for such a long time, let alone a mortgage.

"Many long-term mortgages carry punitive 'early repayment charge' tie-ins for part or the whole term of the product".

"If a borrower's circumstances change and they have come out of a deal, it will probably cost them dearly".

"Without a crystal ball, any fix longer than five years is risky territory".

""Additionally, choosing a fixed rate should never be to 'buck' interest rate trends - this would reduce the choice of mortgage product to a gamble.

No one knows what will happen to rates, so the choice needs to be made because of circumstances and the need for 'peace of mind' to avoid an unaffordable rate rise".

""It is non-sensical for the Government to automatically assume longer-term fixes will be the best product for everyone - each situation should be assessed on a case by case basis.".

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