The government needs to reduce uncertainty around fixed rate mortgages if it wants to increase their appeal, it has been claimed.

Moneyfacts has stated that, as well as uncertainty about the future direction of interest rates, there is the issue of potential lifestyle changes which may be deter some people from taking up such a mortgage.

The group cites issues such as a marriage breakdown, long-term unemployment or inability to work due to illness which may result in a homeowner wanting to switch their mortgage mid-term, which could land them with expensive repayment penalties.

If the government wants an "increased take-up" of such products, they need to give "serious thought" to reducing levels of uncertainty, says the group

A spokesperson commented: "If a clause was introduced to cover uninsurable life events such as marriage breakdown, whereby the borrower could switch to a more suitable mortgage without being subject to an expensive redemption penalty, such innovation would perhaps make longer term deals more appealing."


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