The Government will renew its campaign to dispel the apathy felt by most homeowners towards long-term fixed-rate mortgages. Gordon Brown is convinced that such loans – popular in the United States and in Europe – are the key to housing market stability. Now Alistair Darling will offer help to lenders to encourage “more people to fix their mortgages as a matter of routine”.

About 30 lenders, including Abbey and Halifax, now offer loans with fixed-rate terms of ten years or more, but homebuyers are deterred from deals by the punitive exit fees almost invariably charged for escaping from such arrangements. The Council for Mortgage Lenders highlighted this obstacle yesterday as the key feature that must be addressed to “stimulate mainstream consumer appetite”.

Reforms to be introduced in next year’s Budget will make it easier for lenders to finance long-term fixes through covered bonds. Ray Boulger, senior technical manager at John Charcol, the mortgage broker, believes that the changes will be designed to ensure that more bonds are issued in sterling, so making them more appealing to investors such as pension funds.

Recent covered bond issues from Halifax, Nationwide and Bradford & Bingley have been in euros.

Mr Boulger argues that lenders will still find it difficult to woo borrowers with long-term fixes. The 25-year fix will appear to be attractive to prospective borrowers only if its rate is below that of a shorter-term offer. That is difficult to achieve.

The two-year fix is the most popular type of mortgage, despite the repayment shock that can confront the borrower at the end of the term if interest rates have risen in the meantime.

John Postlethwaite, consultant at Punter Southall, the financial advisers, said that long-term fixes were not sufficiently adaptable to changing lifestyles. “Someone taking a ten-year fixed rate would not want to be tied down for ten years without the ability to review things,” he said. “If you look at a first-time buyer, in the first ten years they may move house twice, get married and have children. Although they might like the idea of a long-term fixed rate at the start, their changing circumstances would mean it may not be suitable for the whole ten years.”

The Government’s first drive to popularise longer-term fixed rate deals followed the publication in March 2004 of the Miles review, conducted by David Miles.

This study lamented borrowers’ propensity to focus on the level of the monthly repayments on a mortgage, rather than taking a more considered view of the future of interest rates and their ability to afford future rises in repayments.

Case study

Eamon McCurry, 24, a technical analyst from Edinburgh, earns £24,000, and pays £520 a month on rent. He drinks 156 units of alcohol and spends more than £400 on socialising a month. He is repaying his student loan and a £2,000 bank loan. He also has £3,000 in an Isa. Eamon says: “House prices are the biggest issue for me at the moment. With prices as high as they are, it will be almost impossible for me to get on the property ladder. I’ve still got a long way to go before I can even afford a deposit, let alone fees and stamp duty.”

Impact: Better off by £108 because of changes to income tax already announced.

Verdict: “Ten year fixed-rate mortgages would definitely appeal to me, provided the rates were competitive. It would give me much more stability. I’m disappointed that he didn’t mention stamp duty. If the Tories campaigned at the next election on their proposals to remove stamp duty it would really make me sit down and think, purely because I want to buy in the next year.”

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive