Homebuyers told: think long-term

Banks moved to throw their backing behind the comments of the chancellor Alistair Darling who said the government is to publish proposals to increase the number of long-term mortgages.

The idea behind the policy is to both provide better value for money in mortgages and make it easier for new buyers to get on the property market.

In response to the new direction from the government, Anne Gunther, chief executive of Standard Life Bank, said: "It is imperative that as an industry we work with government to ensure that consumers are given all the information to make the best long-term financial decisions they can.

Standard Life said that its own research showed that short-term discounted mortgages only benefit five per cent of homeowners while Ms Gunther added: "The report is clear in its conclusions that for most people a competitive standard variable rate will be the most beneficial over the long term. Longer term fixed rates should also be considered, given the certainty they bring."

Nici Audhlam-Gardiner, head of Mortgages at Abbey, was less appreciative of the government's new position, saying: "While it's positive to see that home ownership is on the government's agenda, it is critical to ensure that initiatives align with what customers want."

She suggested that recent trends suggest homeowners are looking for short-term fixed rate deals more often and said that 25 years can see "economic circumstances and people's lives change fundamentally".

"Few people are willing to tie themselves into a deal for this length of time - they want more flexibility," she explained.

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