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25 year fixed rate mortgage launched by Nationwide

Following calls from the new prime minister Gordon Brown for more affordable housing and mortgage solutions, the Nationwide has launched a 25 year fixed rate mortgage deal.

This new mortgage deal could help homebuyers to enjoy increased financial stability in light of the rising interest rates.

Interest rates have gone up five times in the space of a year, and the rate currently stands at 5.75%, the highest in six years, since the last interest rate rise of 0.25% earlier in the month.

Last week Gordon Brown stated that longer term fixed mortgage deals were important in order to aid affordability and financial stability for prospective homebuyers in the current climate.

Following this, one of the UK's leading building societies, Nationwide, has now launched a fixed term 25 year mortgage, which means that property purchasers can enjoy stable repayments throughout the term of their mortgage without worrying about rising interest rates.

The Nationwide had offered this type of long term fixed rate mortgage before, and according to reports this proved quite popular, although some experts have expressed concern over how many people will want to be tied into a fixed rate for such a long period, as this could prove expensive in the event that interest rates start to fall again.

One industry official stated: 'Signing up to a long-term fixed-rate deal does offer peace of mind that your repayments will not increase over your given deal period. But it is also in effect a long-term gamble on rates. While you may feel smug as rates rise, if they drop you may be kicking yourself, especially if this persists over a long period of time.'

Tom Smith
26th July 2007

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