According to comments a few years later, Miles’ report recommended improving the transparency of mortgage pricing and consumer information but there was no political appetite to implement this. The few long-term products that did appear didn’t last long, with lenders complaining of a lack of demand.
So with a lack of demand for the ten-year mortgage prevalent throughout the last decade, why should the uptake be different in 2014 than it was in 2004 when there was significantly more publicity?
Even if seeking fixed medium term monthly outgoings, isn’t ten years just that bit too long, especially where such a mortgage carries significant early repayment charges?
The same borrower concerns exist: a lot could happen over a ten year period. Myriad changes including divorce or the need for relocation may well mean people need to sell; or someone may inherit money or have a change in financial circumstances where they can pay their mortgage off.
In its current form, a ten-year mortgage could be suitable for someone who is buying their final property and is very settled, but they are unlikely to be appropriate for younger people with more dynamic needs.
To be suitable for the majority of people, a ten-year mortgage needs to allow for changes of circumstance. Break clauses need to become an inherent part of the product so the borrower can make an overpayment or fully redeem their mortgage without punitive costs.
While the current interest rates are very attractive, we live in a dynamic society where people’s lives are likely to change multiple times over a ten-year period. To be a success, these mortgages need to factor this in and cater for changing lifestyles.
Toni Smith is sales operations director at First Complete
