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Self-build support
Housing minister Grant Shapps has urged lenders to give more support for self-build homes and to consider offering fixed rate mortgages of up to 25-years.

Mr Shapps told the Building Societies Association in London that “a self-build revolution” was needed to tackle the current housing shortage. And in a drive to provide borrowers with greater stability in turbulent times, he said lenders should follow the lead of Germany and Scandinavia by offering fixed-rate mortgages lasting as long as 25 years.

In his speech, Mr Shapps said Britain was at the bottom of the European league for building new homes, despite research suggesting many people would like to build their own. One of the problems was the reluctance of lenders to invest in such projects, he added.


Mr Shapps said: “We just aren’t building enough homes. We are going to see 240,000 new households formed every year over the coming decades. House prices doubled in the decade to 2008, making it ever more expensive to get a foot on the ladder. And now, the vast majority of under-30s – some four in five – cannot afford to buy a home without help from the bank of mum and dad.”

Mr Shapps said he liked to think of longer term fixed mortgages as “peace of mind” mortgages, giving households greater certainty over their future outgoings.

The minister believes that use of “portable” deals – where borrowers are able to move house and keep their existing mortgage – and “cap and collar” arrangements, where the interest rate on a loan can only move within limits and borrowers are not liable to sudden repayment increases, could make longer deals more appealing to borrowers.

Paul Broadhead, head of mortgage policy for the BSA, said longer-term fixed rate mortgages have been offered in the past but with limited consumer demand. He added: “The challenge with fixed rate mortgages is always the balance between price and flexibility for the consumer. The more flexible a fixed rate is the more expensive it is for lenders to fund with the knock-on higher cost to consumers.”