Housing Minister, Grant Shapps has called for mortgage lenders to introduce fixed rate mortgages with much longer terms as he believes it will help families on a tight budget and would encourage greater market stability. At the moment there are no mortgage deals available which guarantee the interest rate for the life of the mortgage, and the majority of longer-term deals usually require large deposits.

The housing minister was speaking at the Building Societies Associations Annual Mortgage Seminar last week and pointed out that the longest current term for fixed rate mortgage is generally five years. He thinks longer term fixed mortgages would be welcomed by families as it would enable them to budget years ahead, and these types of mortgages would be especially beneficial for first-time buyers as well as for investors looking to purchase buy to let property. He also thinks such deals should allow borrowers to move house and to keep their existing mortgage.

These types of deals have been available in the United States for many years and the current base rate in the US is near zero and is expected to remain so until at least 2013, while the average rate for a 30 year fixed loan is 4.11%. This looks like a pretty good deal when you consider that historically the average mortgage interest rate would normally be considerably higher, even though we have all become used to paying less over the last three years.