Speaking at the BSA’s Annual Mortgage Seminar, Shapps said offering borrowers the option of long-term mortgages would allow them to “know where they stand” when buying.
He said: “Longer-term mortgages – possibly as long as 30 years – could help families on tight budgets know exactly where they stand when they are buying a home, by giving them greater certainty over how much they will be paying for their home in years to come.
“While they won’t be right for everyone, lenders should start to look at the case for 30-year mortgages and how we can move to a more stable housing market where first-time buyers can get their first foothold on the property ladder at a cost they know they can afford.”
However, the industry highlighted that there is little demand from borrowers for long-term fixed rates.
Paul Broadhead, head of mortgage policy at the BSA, said: “Longer-term fixed rate mortgages have been offered in the past but with limited consumer demand. Ten-year rates are currently available and lenders do respond with new products where demand exists.
“The challenge with fixed rate mortgages is always the balance between price and flexibility for the consumer. The more flexible a fixed rate is the more expensive it is for lenders to fund with the knock-on higher cost to consumers.”
He added: “We are keen to hear more about the Minister’s ideas on new sources of long-term market funding.
“We would certainly not advocate a ‘one-size fits all approach’ to mortgages. It is right for lenders to offer a range of products which suit the different needs of individual consumers.”
In addition, Shapps told the conference that lenders must tackle their misconception that backing self build is a “risky proposition” in order for the sector to grow.
He said: “Some people believe that backing self build is a risky proposition, but BuildStore has reported that there has been less than 50 repossessions from over 15,000 products in the last ten years.
“I know there are 20 building societies that are up for supporting the sector and that’s a great tribute to their good sense of resources.”
He added that while the self-build industry is considered quite small, it is still worth £3.6bn each year.
Meanwhile, Shapps said that there was a “role to be played” by mortgage indemnity insurance to help more first-time buyers into the market and encourage prudent lending. He told delegates that “discussions are in play” in the industry about using such insurance.
However, despite ongoing calls for Stamp Duty reform, Shapps said there is nothing “immediately in the pipeline” on tackling the property tax, but maintained it is an issue he continues to look with his government colleagues and the Treasury.
