In doing so, the Group believes that a sizeable LTFR mortgage market should supplement – and not supplant – the existing, very dynamic UK mortgage market where the emphasis is on short term variable rate loans.
According to Halifax, consumers move markets. It is only when consumers see a clear benefit from LTFR products that they will take these products up in significant numbers. Halifax believes that the benefits of LTFR products are primarily around peace of mind and the certainty that the monthly mortgage payment will be the same for the duration of the mortgage. The Group does not believe that LTFR products are a miracle cure for the UK housing market, if indeed there are such problems anyway.
Commenting, Philip Hanson, General Manager Mortgages, said: “Our research shows that the main long-term driver of UK house price growth is the level of employment; for this reason, it is difficult to see how a greater emphasis on LTFR products in their own right could act as a brake on house price growth.
“It is important that the mortgage industry works with the Government and other financial institutions to develop a deep and broad wholesale money market facility. Here, the objective must be to create strong, long term funding flows thereby ensuring that, going forward, sizeable redemption penalties are not a significant feature of any LTFR mortgage market.”