New lender offers 50-year fixed mortgages to borrowers looking to beat inflation

·2 min read
50 year mortgage rate fix home owner
50 year mortgage rate fix home owner

A new mortgage lender has been granted a licence to offer 50-year fixed-rate mortgages as a growing number of homeowners seek to fix for longer to protect themselves from rising costs.

Perenna, a UK-based specialist lender, said it would initially launch 30-year loans before later rolling out longer terms, after being granted permission by the Bank of England. Rates are expected to be between 4pc and 4.5pc.

The launch comes as the number of people searching for 10-year fixes has risen by 54pc in the last year, according to Twenty7Tec, a mortgage data firm. Borrowers have tried to negate the effects of rising interest rates and soaring inflation by fixing their loans for longer periods. More than 145,000 borrowers sought these long-term loans in the last week, the firm said.

However, lenders have pulled dozens of longer-term fixes from the market as borrowers scramble to lock into fixed rates before they increase. Data from analyst Moneyfacts showed 180 10-year fixes were available in February, but that figure has fallen to 130 today.

Arjan Verbeek, of Perenna, said the lender was offering long-term fixed-rates partly in response to inflation, but also to “improve affordability” for prospective house buyers.

“Rates are going up and it’s eating into disposable income,” he said, “There’s real pressure on consumers and they need to appreciate what a fixed rate means. It means security – and that’s very important.”

Mr Verbeek said the UK housing market was “way out of whack” with other countries such as Denmark and America, where longer fixed-rate mortgages are more common.

Banks in Britain usually provide mortgages ranging from two to 10 years, with two and five-year fixes being the most popular deals. Perenna said it would launch its first loan in the next six months.

In July, Boris Johnson was said to be considering plans to allow house buyers to take out 50-year mortgages that they are able to pass on to their children. The proposals to allow first-time buyers to take out “cross-generational” mortgages would allow them to borrow more money over a longer period.

The loans could then be passed down to children, along with the property, when the original owner retires. Ministers argued these would make it easier for buyers to get onto the housing ladder in more expensive areas of the country.

However, neither Liz Truss nor Rishi Sunak has publicly backed Mr Johnson’s plans as part of their ongoing leadership campaigns.