LONDON (Thomson Financial) - Nationwide Building Association said it will reintroduce a 25-year fixed rate mortgage only a day after UK Prime Minister Gordon Brown expressed the need for such products to encourage home ownership.
Nationwide said the product would have a rate of 6.39 pct and will be available from July 17. Its focus would be on first time buyers or borrowers moving home who still have a term of at least 25 years.
The announcement comes just after Prime Minister Brown said his government is considering making available long-term fixed rate mortgages of 20 years or more in an effort to broaden home ownership. He also pledged to have more housing built and to examine shared equity schemes in order to help people buy homes.
The new mortgage product also comes at a time of rising concern among prospective home buyers over the steady rise in UK borrowing costs. The Bank of England has hiked interest rates steadily since August last year, bringing them to 5.75 pct this month, and many expect it to raise rates once more this year, increasing affordability pressures in the property market.
"Our experience is that the 25-year fixed rate has a place in the market and offers long-term stability and flexibility for borrowers who want to protect against fluctuations in interest rates," said Stuart Bernau, Nationwide's executive director.
Nationwide had previously launched the 25-year fixed rate mortgage in March of this year, and said it sold out in five weeks.
carlo.piovano@thomson.com
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