Michael Gove, the Housing Secretary, has called for the introduction of long-term fixed-rate mortgages to the UK housing market, in a move to provide financial stability to homeowners amid a turbulent mortgage landscape.
Speaking to The Telegraph, Gove expressed concern about the escalating difficulties households face in accessing suitable mortgage finance. He said the adoption of fixed-rate mortgages for extended periods, similar to models used in countries like Canada, could offer households protection from fluctuating mortgage costs.
“One of the things that I think is right for levelling up overall is making sure we can develop the types of products that are elsewhere in the world – particularly in countries like Canada – which are long-term, fixed-rate mortgages,” Gove explained.
Such an approach, he suggested, would mitigate the risk of unpredictable mortgage payments that currently oscillate every two or five years under current lending arrangements. Instead, borrowers would gain long-term financial certainty with a fixed rate for periods extending to 25 years.
“I think that is something we should look at,” Gove said, indicating a possible policy shift in the Government’s approach to property finance.
The proposed mortgage structure could offer UK homeowners greater security and predictability in their financial planning, shielding them from the effects of volatile mortgage rates. However, implementing this system would require cooperation from financial institutions and a reassessment of current lending risk models.
This proposal comes as the UK housing market faces increasing strain from mounting borrowing costs.
