He finished paying off the mortgage in 1981. That year the Bank of England base rate was around 14 percent. In 1956 his fix would probably have been a maximum of 4 per cent.
According to the Daily Telegraph, Michael Gove tried to float the idea of 25-year mortgages but got nowhere. Its time has now come.
There would have to be suitable break clauses to protect consumers every five or 10 years if the prevailing rates went against them. Refinancing would also have to be allowed at a reasonable cost.
Long-term fixes work in equity release
Switching is now standard in the lifetime mortgage and equity release arena, cleaned up after numerous scandals saw penal interest destroying all the equity in such homes.
Now there is a lively secondary equity release market where borrowers can sometimes get out of onerous deals for a fee if interest rates move against them. And quite right too.
Can we not take a leaf out of this formerly derided sector?
I think of so many aspiring young people buying a home, investing so much hope in the future and at such a high cost.
They are blissfully unaware of a possible financial Armageddon when the BoE’s interest rate hikes really begin to bite.
This doom scenario will hit the 30 to 50-year-olds worse of all.
These workers form the backbone of the economy. They finance their parents’ pensions and do much of the heavy lifting of supporting benefits for the poorest in society through almost penal taxation. Their children are our future.
Yet, these unlucky souls, who will miss out on decent DB pensions, could find their homes repossessed in a repeat of the 1990s if the BoE is too gung-ho in its efforts to quell inflation.
Give people the choice: pay a little more now for security or go for broke with mortgage roulette on deals too good to last.
Stephanie Hawthorne is a freelance journalist
