MoneyExpert.com: Halifax’s new 25 year fixed rate mortgage

Sean Gardner, Chief Executive of MoneyExpert.com, said: “At first glance the option of a 25 year mortgage might seem attractive. Interest rates are rocketing and the cost of living is increasing, making money tighter than it has been for years. So you might be forgiven for thinking that Halifax is offering you a quarter of a century of peace of mind.

“The reality of course is that rates go down as well as up – true, rates were as high as 14 per cent 25 years ago, but they also went as low as 3.5 per cent when the going was good.

“The Halifax deal is competitive in the current market – its 6.39 per cent APR is actually below the market average 6.44 per cent across all fixed rate deals.

“However as with any fixed-rate product, there are fees for arranging the mortgage as well as penalties for leaving early. And if you’ve signed up for 25 years, that’s a long time in which to change your mind.

“Our Switching Index shows that fewer people are changing mortgage provider as more and more people tie themselves into fixed deals. Almost half a million fewer customers switched mortgage in the past six months compared to the previous six months.

“That shows the appetite homeowners have for fixed rates, which is why lenders are reacting with longer and longer terms on their products. But we’d advise anyone entering into a 25-year deal to do so with extreme caution.”