April Mortgages, a new Dutch-style mortgage lender, has stepped onto the scene, offering fixed-rate mortgages where the rates will automatically reduce as borrowers repay them.
This move came hot on the heels of Perenna, another lender that launched in January 2024, both aiming to carve out a niche in a market traditionally dominated by shorter-term offerings.
Historically, British homeowners have been hesitant to lock in for the long haul, preferring the flexibility and often lower rates of shorter-term mortgages.
However, the economic turbulence and interest rate fluctuations of the past two years might have stirred a shift in consumer sentiment.
April Mortgages’ entry into the market has once again tested the waters for such products, potentially heralding a significant change in how Brits approach their mortgage planning.
Reaction:
Rohit Kohli, director at The Mortgage Stop:
“It’s always good to see new lenders and new products coming to the market, it increases choice and should help drive further innovation.
“The events of the last couple of years have been front and centre of many people’s minds and we have had conversations with potential borrowers about long term fixed where we have felt their circumstances would suit.
“If April Mortgages do launch these products with reasonable ERC terms, then they could offer further choice to borrowers which is very much needed in a market filled with 2-year and 5-year options from the mainstream lenders.
“For a few clients they idea of knowing your monthly payments for the long term is appealing, particularly where they have seen friends and family struggle recently.
“However, most people are still set on shorter term mortgages, and I think whilst these long term mortgages are a positive step it will take years before they become a standard option.”
Lewis Shaw, owner and mortgage expert at Shaw Financial Services:
“Many consumers are wary of new lenders and new products because we’ve seen many lenders come and go in the past few years, announcing they will change the mortgage game.
“Moreover, new entrants such as April and Perenna aren’t going to get much traction with limited distribution models and could alienate many brokers if they’re unable to transact business with them.
“As for the popularity of long-term fixed-rate mortgages, I personally can’t see it catching on; we only have to think back a few years when you could pick up a 10-year fixed-rate at 1.5%, and consumers still chose shorter-term products.
“However, more choice for consumers is positive, and as always, the market will give us its answer in due course.”
Elliott Culley, director at Switch Mortgage Finance:
“Long term fixed lenders have a great opportunity to kickstart their campaigns for long term fixed rates due to the recent economic turmoil.
“Lots of borrowers were kicking themselves that they didn’t tie in fixed rates for longer.
“Education on these type of mortgage will be key as borrowers will assume they will work in the same way to a traditional mortgage.
“The two offerings from Perenna and April do offer tie in periods but have flexibility so you may not need to pay any early repayment charges or fees to come out of the deals if you want to move house.
“There will be a market for this type of product, but there will need to be a change in public opinion and attitude and this will be the biggest hurdle these lenders will need to overcome.”
Ben Perks, managing director at Orchard Financial Advisers:
“As brokers what we strive for is variety for our clients. A suite of products for us to discuss with borrowers, so we have an appropriate option for each individuals’ circumstances.
“The longer-term fixes may not be everyone’s cup of tea, but for those that it suits it is great to see a bit more competition in the space.
“Competition drives better products and rates, so the more Lenders the better. With the volatility of interest rates in recent years, I think the interest in these products is growing.
“The key thing with these products is the ‘lock in’.
“Whilst clients love certainty, they also want the ability to reassess options in the short to medium term.
“So, whilst interest in the products will grow, and for some people they will tick a box. I think the vast majority of borrowers will be reluctant to take decade long fixes, unless they are shockingly cheap.”
Scott Taylor-Barr, principal adviser at Barnsdale Financial Management:
“UK borrowers have never really bought into the long-term fixed rate mortgage idea, much to the frustration of many in the Government who keep pushing for this type of mortgage to be more widely adopted.
“Like many other long-term fixed rates deals the issue with this new offering from April is one of flexibility and risk; do you feel happy locking into a 7-, 10- or 15-year fixed rate deal at over 5% now?
“People don’t want to be tied into a 10-year fixed rate at 5%+ if rates are available at 3% or 4% at some point in the future.
“Some of the new crop of long-term fixed rate mortgages have no form of tie-in to the lender, which does massively help their appeal.
“April has a ‘half-way house’ type approach; you are free to pay the mortgage off from your own resources without charge (so a house sale, or inheritance for example), but they will hit you with a penalty charge if you switch lenders to get a better rate.”
Bob Singh, founder at Chess Mortgages:
“The recommendations of the Miles Report are finally being implemented albeit by non-traditional lenders.
“I believe if the price is pitched correctly and having the right flexibility to switch to lower rates (should rates fall further) this could be a winner.
“That is until the UK based lenders fight back with equal or better products.
“This will sound the death knell for broker who rely on 2 years deals to churn clients.
“Any proposition therefore needs to address the broker’s remuneration over the term.
“The change in mindset may take some time but the system works well in the US and offers homeowners protection against times of rising rates.”
Aaron Strutt, product and communications director at Trinity Financial:
“We have seen a few of these lenders offering longer-term fixes over the years and they probably should be more popular, although the overwhelming number of borrowers simply stick with two or five-year fixes.
“Many brokers in the mortgage industry remain sceptical about these long-term products.
“They need to be cheaper, more flexible and offer something unique to entice more borrowers.”
Graham Cox, founder at Self Employed Mortgage Hub:
“Long-term fixed rate mortgages are to be welcomed. They won’t be for everyone, particularly if the early repayment charges are punitive, but it’s great that the option is available.
“The biggest challenges lenders like April face is making consumers aware these products exist, and gaining wide enough distribution with brokers.”
Michelle Lawson, director at Lawson Financial:
“Long term fixed rates aren’t popular in the UK market for most due to their restrictiveness although April’s offering looks interesting as it negates the issues that most people can’t foresee.
“By not charging penalties on overpayments, full redemption from own funds or on moving house, this is a step in the right direction for product innovation.
“We need some new ideas and new blood so it will be interesting to see how this transpires hopefully in a fully accessible market rather than a restricted chosen few.”
Akhil Mair, director at Our Mortgage Broker:
“BOOOM! The emergence of April Mortgages, signals a significant shift in the UK mortgage landscape.
“The recent economic turbulence and interest rate fluctuations may have prompted a re-evaluation of long-term fixed-rate products.
“There seems to be a growing interest among UK clients for these offerings, driven by a desire for stability amidst uncertainty.
“The future outlook and the increasing interest in long-term fixed-rate products could herald a transformative period for the UK mortgage landscape.
“Beyond offering stability to individual homeowners, this trend may catalyse broader changes in financial planning strategies.
“As more individuals opt for long-term certainty, we could see a shift in the mortgage market towards greater emphasis on security and predictability.
“This could prompt other lenders to follow suit and introduce similar products, further diversifying the options available to consumers.”
Chris Schutrups, founder at The Mortgage Hut:
“As brokers we aways welcome new lenders to the market to help us support and help more customers.
“There are lots of positives when it comes to longer term fixed rates and ultimately pricing is something we strive in the UK market as it stands right now.
“Longer term fixed rates have to be structured in such a way so that consumers have confidence to buy our price, which they think is good value for money. An example is Perenna.
“Their lifetime product is something that consumers wouldn’t go to because they’re worried about changes in circumstances and large exit penalties.
“They have been clever in how they structure and in doing so with a 5-year tie.
“It’s a 5-year fixed rate which will then continue on, so from a customer’s point of view, if rates decrease, they can move away after five years.”
