Borrowers can fix their mortgage at less than three per cent for 30 years 

Borrowers are to get the chance to fix their mortgage rate for 30 years at less than three per cent, The Mail on Sunday can reveal.

Specialist lender Kensington Mortgages will this week launch fixed-rate deals on home loans that last for 25 and 30 years.

The long-term deals are among the first of their kind.

Most homeowners who take out fixed-rate mortgages lock into a two or five-year deal.

Ten-year fixes are available but few customers opt for them, according to industry experts.

Borrowers will, however, be taking a gamble on interest rates, with two-year fixed rate deals currently available for as low as 0.99 per cent and five-year deals as low as 1.34 per cent.

But Kensington’s 30-year home loans are expected to have competitive interest rates of between 2.5 per cent and three per cent and will be offered across different deposit sizes.

The long-term deals come amid expectations of an increase in interest rates.

Andrew Bailey, Governor of the Bank of England, recently said he was ‘very uneasy’ about the rising cost of living, paving the way for a jump in rates.

Figures last week revealed prices have increased at their fastest rate in nearly a decade, with inflation hitting 4.2 per cent.

Economists believe the Bank of England will increase interest rates from a record low of 0.1 per cent either next month or early next year.

Ray Boulger, a mortgage broker at John Charcol, said: ‘It is very rare to see a 30-year fixed-rate deal.

The timing of this is very good. Interest rates are close to all-time lows but are expected to increase over the next year, so now is an ideal time to take out a long-term fixed-rate deal – as long as it doesn’t have an onerous early repayment charge.

‘If it is affordable now, it will likely be affordable for the whole term, because you don’t have to worry about rising interest rates.’

Kensington is understood to be working with insurance firm Rothesay to use some of its £60 billion firepower to finance the loans.

The long-term deals come amid expectations of an increase in interest rates (file photo)

Banks tend to offer short fixed-rate deals because they rely on customers’ deposits, which can be quickly withdrawn by savers, to fund them.

Pension and insurance companies, by contrast, sit on cash for longer, giving them a greater incentive to finance longer home-loan deals.

It is expected more insurance companies will move into the mortgage market to put some of their cash to work in search of a higher income.

It is also part of a push by Government to encourage longer-term mortgage deals.

At the Tory Party conference last year, Boris Johnson pledged to boost the housing market with longer-term loans, adding: ‘We believe that this policy could create two million more owner-occupiers, the biggest expansion of home ownership since the 1980s.’