Has Nationwide got a crystal ball?

Commenting on the Nationwide’s 25-year new fixed rate mortgage, Louise Cuming, head of mortgages at price comparison website moneysupermarket.com, said:

“The Nationwide offering is an interesting variation on the fixed rate mortgage – but can it conquer where others failed? It’s very risky for people to commit to a single product with one lender for such a long time when nothing in the future is guaranteed.

“Unless you have a crystal ball to foresee your own situation and future interest rates, it is ludicrous to allow yourself to be tied into a contract for this length of time – even though the product boasts no earlyredemption fees after 10 years. Not only this, but interest rates are expected to start reducing next year, so it makes no sense to commit now to what is potentially a high rate of interest.

“It strikes me as a clever marketing ploy to maximise customer retention by taking advantage of people’s desire for ‘security’. I would urge people to look elsewhere for peace of mind – there are plenty two and three year deals on good rates. But, if a longer term fix is required with a ‘get out’ clause after 10 years, better options are available through providers such as the Derbyshire, Yorkshire Building Society or Skipton Building Society.”