For 30 years, borrowers can get their mortgage fixed at less than 3 percent

  • This is part of an effort by Government to promote longer-term mortgages
  • Kensington Mortgages, a specialist lender in home lending will launch 30-year loans
  • Many homeowners with fixed-rate mortgages agree to lock in their payments for at least two years.
  • Expectations of an increase in interest rate are reflected in the long-term contracts 










Borrowers are to get the chance to fix their mortgage rate for 30 years at less than three per cent, The Mail on Sunday can reveal.

Kensington Mortgages, a specialist lender in mortgage lending will launch this week fixed-rate home loan deals that can last 25 to 30 years.

These long-term agreements are some of the most innovative.

Many homeowners that take out fixed rate mortgages are locked into two- or five-year deals.

According to experts in the industry, ten year fixes are possible but only a few customers decide to take them.

Specialist lender Kensington Mortgages will this week launch fixed-rate deals on home loans that last for 25 and 30 years (file photo_

Kensington Mortgages, a specialist lender in home loan financing will launch this week fixed-rate loans for homes that are 25 or 30 years old (file photo_).

Borrowers are however taking a chance on interest rates with current two-year fixed-rate deals at as low 0.99 percent and 5.34% respectively.

But Kensington’s 30-year home loans are expected to have competitive interest rates of between 2.5 per cent and three per cent and will be offered across different deposit sizes.

Expectations of an increase in interest rate are the backdrop to which long-term deals will be made.

Andrew Bailey, Governor of the Bank of England, recently said he was ‘very uneasy’ about the rising cost of living, paving the way for a jump in rates.

Last week’s figures revealed that prices rose at an unprecedented rate of nearly 10 years, and inflation reached 4.2 percent.

According to economists, the Bank of England is expected to raise interest rates by 0.1% or more from its record-breaking low of 0.1% next month.

Ray Boulger, a mortgage broker at John Charcol, said: ‘It is very rare to see a 30-year fixed-rate deal.

It is also very well timed. Interest rates are close to all-time lows but are expected to increase over the next year, so now is an ideal time to take out a long-term fixed-rate deal – as long as it doesn’t have an onerous early repayment charge.

‘If it is affordable now, it will likely be affordable for the whole term, because you don’t have to worry about rising interest rates.’

Kensington is understood to be working with insurance firm Rothesay to use some of its £60 billion firepower to finance the loans.

The long-term deals come amid expectations of an increase in interest rates (file photo)

Expectations of an increase in interest rate (file photo) are the backdrop to long-term contracts.

Banks tend to offer short fixed-rate deals because they rely on customers’ deposits, which can be quickly withdrawn by savers, to fund them.

In contrast, pension and insurance companies hold more cash, so they are more inclined to finance long home-loan terms.

Insurance companies expect to increase their involvement in the mortgage market, hoping to earn more.

This is part of an effort by Government to promote longer-term mortgage agreements.

At the Tory Party conference last year, Boris Johnson pledged to boost the housing market with longer-term loans, adding: ‘We believe that this policy could create two million more owner-occupiers, the biggest expansion of home ownership since the 1980s.’

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