Would 30 years mortgages at the same rate work in the Uk?

[RosieLeaLovesTea]

I think how it works in USA is that people take out 25/30 year mortgages at the same rate
say 5% and they know how much they are paying for that length of time. Would that work inthe UK and bring more stability to the housing market?

On a very cursory search it requires a 20% deposit and anapr of 8.111%.

Already here https://www.theguardian.com/money/2023/sep/07/new-uk-mortgage-lender-perenna-offers-30-year-fixed-rate-deals

One of the things to keep in mind is that the property ladder isn't really a thing in the US. Renting isn't seen as "throwing money away" so a lot of people don't think of buying until they get married and are thinking of having children. So you buy a 3 bed house to start, and maybe upsize when your kids are pre-teens/teens and you need more space. There isn't the worry about being able to port your mortgage or get out of your current deal because you plan to move in a few years.

@Insuranceheadache you beat me to it! I work in mortgages and actually had an email about a job at that company on Monday
I have to admit I didn't know about the launch of these new mortgages

It's also a lot easier to buy/sell properties in the US, with a bridging loan. Chain concept doesn't exist like it does in the UK. The property purchase can typically be completed in less than a month after making an offer.

What happens when rates fall? I paid years and years at sub 2% interest rates. I'd have been really peeved if next door, who bought 6 months later were paying 2% when I was paying 5% with no get out.

What happens to redemption charges? They are usually high during a fixed term.

Could be great if you don't move and interest rates rise.
Could be expensive if rates fall, or you need to move.

You can also hand in the keys at any point you are in negative equity in the US. Not so in the UK. That would result in quite an impact on the UK market I believe.

Personally I don't think people should be celebrating more ways to make the unaffordable affordable via debt manipulation and rule changes (longer mortgages, inherited mortgages etc).

We need houses to be cheaper relative to incomes and be happy with governments that pursue policies with an objective of achieving that, rather than being happy that banks will extend us more and more debt in able to afford the houses we need.