Nationwide's 25 year fixed rate mortgage scrapped
Just five weeks after announcing the availability of a 25 year fixed rate mortgage, the Nationwide Building Society has announced that the mortgage deal has now been scrapped and will no longer be available.
The Nationwide was the first building society to offer a 25 year fixed rate deal on mortgages, but according to reports so many people flocked to take on the mortgage that the building society had to close the scheme.
The Bank of England has hiked up interest rates in the UK several times since last August, and it has gone from 4.5 percent last August to 5.25 percent. The Bank of England is expected to announce another interest rate rise this week, and according to some experts a further rate rise may follow in the summer. All of this has seen property purchasers and mortgage payers flock to try and get fixed rate deals in order to avoid the financial pinch of further rises.
The Nationwide had been offering the fixed rate mortgage at a rate of 5.63 percent for a twenty five year period, enabling borrowers to enjoy financial stability and easier budgeting for the term of their mortgage, and to avoid rising repayments that stemmed from interest rate rises. Borrowers had to be able to put down a deposit of ten percent in order to qualify for the mortgage.
A number of other lenders are continuing to offer twenty five year fixed rate deals on mortgages, and according to a spokesperson for the Nationwide another similar twenty five year deal will be launched soon, although no further details about the deal were provided.
However, some experts think that twenty five years is too long for a fixed rate, as many borrowers do not want to be tied to the same rate for such a long period in case rates start to fall again.
11th May 2007
- Why Does The Interest Rate Of Your Mortgage Change?
The biggest difference between a mortgage and other types of loan is the fact that the interest rate changes throughout the term of the loan. Why is this? And which type of interest-rate arrangement is best?
- How long would you like you mortgage to run? The simple answer would be as quickly as possible, but not everyone can, which means higher repayments and more strain on the household budget.
- Mortgages – What Will Be Next?
Maybe some forty years ago mortgages were very solid things that you took out: you would stick with the same company for the entire period of the loan and you could find fixed rate deals that would also last the full twenty five years.