Research commissioned by the SNP from the House of Commons Library has shown the UK is unusual for not having long-term fixed-rate mortgages.
In Belgium, 92.01% of consumers have a long-term fixed deal of more than 10 years, while in Spain it is 54.9%, in Denmark it’s 52% and in Germany it’s 37.1%.
In contrast, the UK has only a very limited number of lifetime mortgages, which come with higher rates than on the European continent.
At present, Money Saving Expert’s mortgage database has only one provider offering a fixed-rate deal of more than 10 years.
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The funding for UK mortgage providers also primarily relies on deposits, which are subject to variable interest rates.
Other advanced economies utilise covered-bond markets to finance long-term fixed rate mortgages, transferring interest rate risks to investors instead of households.
The average two-year fixed UK mortgage rate has now hit a 15-year high of 6.66%, surpassing the highest peak following Liz Truss’s mini-budget.
Blackford (below) said: “The UK mortgage and housing market is completely broken. Millions of people are struggling to afford their first home and homeowners are being hammered as mortgage rates soar.
“The Tories trashed the economy and Brexit has fuelled soaring inflation but there are also fundamental issues with the UK mortgage model, which limits choice, prevents security, and unfairly places an unbalanced risk at the door of households, instead of market investors.
“The Tory mortgage crisis is, in part, a result of this broken Westminster system, which has left UK mortgage holders uniquely exposed to economic shocks.
“In contrast, the European mortgage model of offering longer-term fixed-rate mortgages over the lifetime of the loan not only offers more interest rate security and certainty for households, in many cases it would also mean a lower rate overall.
“Equally, the European model of utilising covered bond markets as the financing source for these longer-term fixes, acts to balance the risk burden between householders and market investors, with households having far greater protections and far less exposure.
“There is a huge role for the regulators in delivering this more secure model for households. It would require removing multiple barriers, with regulators reassessing their approach and ensuring that affordability checks and loan-to-income flow caps do not obstruct the development of a unique market in longer term fixed rate mortgages.”
The Centre for Business and Economics Research estimates that rising mortgage rates are set to cost homeowners an extra £9 billion this year and into 2024.
And according to the Office of National Statistics, between 2023 and 2024, 2.5 million mortgages are due to be renegotiated.
