BusinessCompany NewsEuro: Backing for long term mortgages

Euro: Backing for long term mortgages

Nearly two-thirds of mortgage holders would take out long term fixed rate mortgages, an idea championed by Gordon Brown in his euro speech yesterday.

Link: Euro: Brown’s statement in full

Of the 2,100 adults surveyed by YouGov on behalf of KPMG, nearly 60% would in principle take out long term fixed rate mortgages, with only 30% saying they were unlikely to do so.

In addition 41% were prepared to pay 2% in set up fees in return for a fixed interest rate.

Yesterday, in his euro speech, the chancellor said the government was ‘examining the structure of mortgage finance including the case for the long-term fixed rate mortgage market in the UK’.

He said the implementation of housing market reforms this year were aimed at curbing house price inflation and entrenching stability – a key stumbling block to the UK joining the single currency.

Andrew Smith, chief economist at KPMG said the results of the survey ‘paint an encouraging picture for the government in terms of consumer interest in long term fixed rate mortgages.

‘However, to have a significant effect in stabilising the UK housing market, large numbers of customers would need to switch to these products. The government may need to offer an incentive in the form of tax allowances if sufficient numbers of mortgage holders are to embrace long term products of this type.’

‘The chancellor also needs the buy-in of mortgage providers to promote the products – and the support of the financial sector in developing a secondary market.

‘The scheme also needs to be flexible enough to enable homeowners to be able to opt out if they want to at reasonable cost.’

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