The building society has withdrawn all core range purchase and remortgage seven-year fixes from its product range but added that Real Life Lending seven-year fixes, which are exclusive to intermediaries, would remain on sale.
A spokesperson for Skipton said: “We have withdrawn our seven-year fixed range from general sale due to lack of customer demand in the current interest rate environment. We recently launched new two-year fixed products, including our lowest ever fixed interest rate, and find that these are more popular with customers at present.”
David Hollingworth, associate director, communications, London & Country Mortgages, said the announcement indicated apprehension among customers who were less willing to lock themselves and a need for product innovation.
He said that record low rates on 10-year deals, such as those announced by Nationwide today, had created an “uptick in interest” but maintained that further innovation by lenders would ultimately lead to increased popularity among customers.
“There is still the issue of Early Repayment Charges and for that reason they are likely to remain a product that’s right for a certain niche of borrower. However, other lenders have also recognised that tie-ins can be a barrier and Newcastle BS and TSB both have options that only lock the borrower in for the first five years,” he said.
“The reasons that long-term fixed rates have not enjoyed wider take-up in the past has been twofold. Firstly they carry a higher rate than is available on shorter-term products and popularity will fluctuate depending on how wide or narrow that margin is,” he explained.
“More importantly, borrowers tend to be nervous about locking in throughout the fixed rate period. Although portable there are no guarantees that the lender will be able to meet future borrowing requirements and 10 years is often too long a horizon for many.”
Hollingworth said the if right blend could be found and the growth in lender options continued, there could be room for a bigger market.
