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Habito announces ‘lifetime’ fixed rate mortgages in the UK

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Mortgage broker Habito has launched ‘Habito One’, the UK’s longest-ever fixed rate mortgage.

First-time buyers, home-movers and re-mortgagers in England and Wales now have access to long-term fixed rate periods starting at 10 years, going up to an unprecedented 40-year fixed rate term.
 
Habito has secured a partnership to originate at least GBP1 billion of mortgages with rates starting at 2.99 per cent. Funds managed by CarVal Investors were involved in financing the transaction. Habito will be legal title holder, servicer and originator of Habito One mortgages.
 
With a Habito One mortgage, there won’t be any early repayment charges (ERCs) or exit fees for the duration of the mortgage meaning customers can lock in their rate – safeguarding against future interest rate rises – but still maintain complete flexibility and freedom over their home finances. Monthly repayments will stay the same throughout the lifetime of the mortgage guaranteeing peace of mind and full control over monthly budgeting forever, removing the need for the continual and often costly cycle of remortgaging every two to five years.
 
With Habito One, mortgage-holders will no longer be at the mercy of interest rate uncertainty – something that was raised by the Chancellor during his Spring Budget on 3 March.
 
Daniel Hegarty, founder and CEO of Habito, says: “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 GBP1,000 each time up to 10 times over the length of the mortgage. And while Habito provides free mortgage advice, some brokers still charge around GBP500 to advise on a remortgage, and that adds up over the lifetime of a mortgage.

“Three quarters of homeowners (73 per cent) said they’d like the option to do more with their home finances in 2021 yet half are unable to remortgage in the next six months because they’re tied into their current deals. Our extensive research into long-term fixed rate mortgages4 tells 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.”

The long-term fixed rate mortgage model is new for the UK but commonplace in countries like the US, Denmark and France. When asked, around a third (30 per cent) of UK mortgage-holders said they would be interested in switching to a long-term fixed rate mortgage, citing flexibility, certainty and protection against interest rate rises as their key reasons.

Habito One mortgage rates start at 2.99 per cent and are fixed for the full contractual term of the mortgage. A range of loan to value (LTV) options for homebuyers from from 60 per cent LTV up to 90 per cent LTV will be available from launch. Habito plans to roll out 95 per cent LTV mortgages from early summer.

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