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Government should act to reduce mortgage 'uncertainty'

Government plans to introduce more long term fixed rate mortgage options will be greeted with uncertainty from many borrowers, it has been claimed.

According to Moneyfacts.co.uk, the uncertainty surrounding mortgage terms of ten, 15 and 25 years will be a "key deterrent" for many homeowners who prefer a more flexible product.

The financial website questions what will happen if borrowers need to switch their mortgage mid-term due to lifestyle changes such as marriage breakdown, long term unemployment or sickness.

Having more long-term fixed rate deals may mean that homeowners will face considerable early repayment penalties, it was suggested.

"Whilst borrowers can insure against unemployment and illness, people are still wary of tying themselves to a fixed rate for an extended period of time," Andrew Hagger at Moneyfacts.co.uk added.

"If the government and lenders want to see an increased take up of these mortgages, then serious thought should be given to reducing the levels of uncertainty whilst still protecting profit margins."

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