"The traditional two or five-year approach to lending is not working for many borrowers. Long-term fixed rate products, without the risk of reverting to SVR, offer a viable alternative."
Its new 'Habito One' range will offer fixed rates between 10 and 40 years with rates starting from 2.99%, all without early repayment charges or exit fees.
The range will be available from the 15th of March. The maximum LTV will initially be 90%, with plans to increase up to 95% later this year.
Rates start from 2.99% at 60% LTV with fixed terms available between 10 and 15 years. A 40-year fixed rate is available at 4.20%.
A 40-year fixed rate at 90% LTV will launch at 5.35%.
All products come with a fixed fee of £1,995.
Daniel Hegarty, founder and chief executive of Habito, said: “The mortgages we have available to us today are remnants of a different age and a different power dynamic between customers and lenders.
“The future has never been less predictable and we need our homes to provide us with safety and financial security. The vast majority of us on a mortgage that’s fixed for two to five years are effectively trapped in a system that doesn’t fit our financial future or our home-buying habits.
“Worse still it demands that we continually switch to a new product before we get stung by a higher rate. This cycle is costly, time consuming and repetitive – roughly £1,000 each time up to 10 times over the length of the mortgage.
“Our extensive research into long-term fixed-rate mortgages tels us that homeowners value flexibility and certainty above all else.
“The current system is designed to offer neither. Our Habito One mortgage will allow people to plan their lives, make their next move, pay off their mortgage – all without punitive charges."
Colin Bell, founder of new mortgage lender Perenna, commented: "At Perenna, we believe that long-term fixed rate mortgages are the future of Britain’s housing market. These products will ultimately give more people the opportunity to step onto and up the property ladder. The traditional two- or five-year approach to lending is not working for many borrowers. Long-term fixed rate products, without the risk of reverting to SVR, offer a viable alternative. Habito’s long-term proposition is a step in the right direction for the market. Perenna will be launching its own range of fully scalable, flexible fixed for life mortgages at competitive rates later this year - providing borrowers with both certainty and flexibility. Our aim is to develop a mortgage market that works for borrowers and allows them to access the funding they need for the homes they really want.”
Kevin Roberts, director of Legal & General Mortgage Club, added: “We should always welcome genuine innovation in the mortgage market and we welcome this initiative from Habito offering a fixed rate mortgage for as long as 40 years. Not only does the launch boost product choice for consumers, but long-term mortgages also have the potential to be a viable route for many buyers to help them achieve their housing ambitions.
“That said, borrowers have so far taken little interest in existing long-term fixed rate mortgages and it remains to be seen just how popular Habito’s new product will really be. Further information on Habito’s loan-to-income limits for these mortgages for example will also help to determine exactly which borrowers could benefit from these solutions. For many borrowers, a two or five year fixed rate mortgage may still prove to be more financially appealing in the short term and we would encourage those looking to buy or refinance to speak to an independent mortgage adviser and benefit from professional support.”
