After CeMAP training, many delegates go on to become mortgage advisors after their exam, and their experience may very well be different to that experienced by mortgage advisors years ago as trends in mortgages and new mortgage products come out.
In the last twelve months, the number and proportion of fixed rate mortgages with long terms of over ten years has almost doubled. Both borrowers and lender are turning to longer term deals to beat the current credit crunch.
In July 2007, according to MoneyExpert, around 8 per cent of products were fixed rate mortgages for ten years or more. Now it is around 15 per cent, so almost double.
There are even 18 different fixed rates deals, where the rate is fixed for 25 years.
There has also been a real drop in the number of mortgage on the market. That doesn’t mean mortgage advisors won’t be needed though. There’s still a huge number of products available – in fact, MoneyExpert’s analysis showed more than 920 fixed rate mortgage products available at the end of July from 74 different lenders. That’s why mortgage advisors are needed.
The average rate of a long term deal, defined as being ten years or more, has increased from 6.39 per cent last year to 6.67 per cent now, which isn’t such a great change compared with other mortgage products.
Many fixed rate long term mortgages offer competitive rates of interest and in some circumstances are well worth considering. It is these circumstances that a mortgage advisor needs to help their customers to recognise. Early redemption charges on a long term deal are higher than shorter term mortgages. For example, one has a 13 per cent redemption charge in certain circumstances, so on a mortgage of £150,000, that would cost the borrower £19,500 to get out of it.
Long term, fixed rate mortgages can be worthwhile if you can accept that there will be times in the long run when interest rates go down and people on fixed rate deals will be paying over the odds.