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Labour has promised a “revolution” in the mortgage market to open the door to 25-year fixed-rate mortgages for millions of homeowners.

Outlining her plan at the weekend, shadow chancellor Rachel Reeves said longer fixed-rate deals would enable people to buy houses with smaller deposits and with lower monthly repayments.

Longer mortgages are common in countries like the US, Canada and Japan, but unlike in some of those, Labour is not proposing they be underwritten by the taxpayer.

Ms Reeves has asked those involved in carrying out a Labour review of financial services to work with the mortgage industry to find ways to remove regulatory barriers and help trigger a broader cultural shift.

Sky News’ Money team asked three industry experts whether they could take off.

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Shadow chancellor Rachel Reeves
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Shadow chancellor Rachel Reeves outlined the plan

Could they be a success?

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Richard Donnell, head of insight at Zoopla, tells Sky News it is a “good idea”, but the challenge will be ensuring rates are as competitive as shorter-term deals, otherwise people won’t be willing to take them out.

The main advantage, he says, would be for first-time buyers.

“Today, the cost of a mortgage and renting is the same, even at 4.5% mortgage rates, but new borrowers are being stress-tested as to whether they can afford 8% to 9%,” he says.

The risk of high mortgage repayments means purchasers – especially first-time buyers – are finding it harder to get on the ladder. As they struggle to get a mortgage, rents have also been rising, leaving people with less in savings. Combined with historically high house prices, first-time buyers are finding it had to put aside the bigger deposits.

“The advantage of long-term fixes is it means you probably avoid the need to stress-test affordability,” Mr Donnell says.

“I believe the government needs to look at how it can support the market for longer-term rates to develop at rates that will support demand for this type of product, as it’s a big mindset change.”

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Mortgage misery across England?

Would Britons really want to lock in?

Kevin Roberts, managing director at Legal & General Mortgage Services, isn’t convinced as things stand.

“It is worth noting that 25-year fixes are already available in the UK, but receive relatively little interest. Typically, people tend to choose the product that offers the lowest rate at that time, and that’s usually a shorter-term product, such as a two or five-year fix,” he said.

David Hollingworth, a director at L&C, agrees.

“There’s potential to grow this sector but until pricing and tie-ins are addressed they may continue to be a useful niche option rather than a market wide choice,” he said.

Two other major drawbacks

Mr Hollingworth highlights another issue.

“Longer-term fixed deals will often tie the borrower in with an early repayment charge throughout the fixed-rate period,” he said.

So if a mortgage needs to be reviewed at some point, perhaps because someone wants to move house, options become more limited.

“Even though deals can be taken to a new property there is no guarantee that the borrower will still meet the lender criteria at that time, or whether the lender will have competitive rates for any additional borrowing.”

Perhaps more obviously, there is also the concern that rates may fall significantly, as happened after the 2008 financial crisis.

“There may be some concern that they will be left high and dry if rates were to subsequently fall,” says Mr Hollingworth.

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Mortgage stats reflect falling rates

What’s already on the market?

The most common longer fix is 10 years. First Direct currently offers a fixed rate of 3.99% over 10 years for a 60% loan-to-value mortgage.

Perenna is a new lender targeting the long-term market, offering rates that are fixed for as long as 40 years but that only tie the borrower in for the first five. They currently offer a 25-year mortgage at 5.75%.

Perhaps recognising the early repayment charge (ERC) issue highlighted above, Kensington Mortgages offers fixed rates for the life of a mortgage and although there are ERCs, they are waived in certain situations – like a house move or sale/repayment.

Who could they benefit?

As discussed, first-time buyers struggling to get on the ladder – but also people who want long-term certainty and perhaps have no intention of moving.

“For example, if they are saving for a wedding in X years’ time, it could be handy to know how much they’ll be able to put away each month if what’s likely to be their biggest expense, their mortgage repayments, stay the same,” says Kevin Roberts, from L&G.

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M&S tells agency workers to stay at home after cyberattack

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M&S tells agency workers to stay at home after cyberattack

Marks & Spencer (M&S) has ordered hundreds of agency workers at its main distribution centre to stay at home as it grapples with the unfolding impact of a cyberattack on Britain’s best-known retailer.

Sky News has learnt that roughly 200 people who had been due to undertake shift work at M&S’s vast Castle Donington clothing and homewares logistics centre in the East Midlands have been told not to come in amid the escalating crisis.

Agency staff make up about 20% of Castle Donington’s workforce, according to a source close to M&S.

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The retailer’s own employees who work at the site have been told to come in as usual, the source added.

“There is work for them to do,” they said.

M&S disclosed last week that it was suspending online orders as a result of the cyberattack, but has provided few other details about the nature and extent of the incident.

In its latest update to investors, the company said on Friday that its product range was “available to browse online, and our stores remain open and ready to welcome and serve customers”.

“We continue to manage the incident proactively and the M&S team – supported by leading experts – is working extremely hard to restore online operations and continue to serve customers well,” it added.

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It was unclear on Monday how long the disruption to M&S’s e-commerce operations would last, although retail executives said the cyberattack was “extensive” and that it could take the company some time to fully resolve its impact.

Shares in M&S slid a further 2.4% on Monday morning, following a sharp fall last week, as investors reacted to the absence of positive news about the incident.

M&S declined to comment further.

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Deliveroo shares surge 17% as £2.7bn takeover looms

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Deliveroo shares surge 17% as £2.7bn takeover looms

Shares in meal delivery platform Deliveroo have surged by 17% as investors react to news of a £2.7bn takeover proposal.

The company revealed after the market had closed on Friday that it had been in talks since 5 April with US rival DoorDash.

Deliveroo suggested then it was likely the 180p per share offer would be recommended, though full terms were yet to be agreed.

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At that price, the company’s founder and chief executive, Will Shu, would be in line for a windfall of more than £170m.

Deliveroo further announced, before trading on Monday, that it had suspended its £100m share buyback programme.

The opening share price reaction took the value to 171p per share – still shy of the 180p on the table – and well under the 390p per share flotation price seen in 2021.

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Deliveroo’s shares have weakened nearly 50% since their market debut.

The deal is not expected to face regulatory hurdles as it provides DoorDash access to 10 new markets where it currently has no presence.

But a takeover would likely represent a blow to the City of London given the anticipated loss of a tech-focused player.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “If the deal is done at that price, the company will fail to shake off the ‘Floperoo’ tag it was saddled with after its disastrous IPO debut in 2021.

“Even though Deliveroo has finally broken through into profitable territory, the prolonged bout of indigestion around its share price has continued.

“The surge in demand for home deliveries during the pandemic waned just as competition heated up. Deliveroo’s foray into grocery deliveries has helped it turn a profit but it’s still facing fierce rivals.”

She added: “The DoorDash Deliveroo deal will be unappetising for the government which has been trying to boost the number of tech companies listed in London.

“If Deliveroo is purchased it would join a stream of companies leaving the London Stock Exchange, with too few IPOs [initial public offerings] in the pipeline to make up the numbers.”

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US trade deal ‘possible’ but not ‘certain’, says senior minister

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US trade deal 'possible' but not 'certain', says senior minister

A trade deal with the US is “possible” but not “certain”, a senior minister has said as he struck a cautious tone about negotiations with the White House.

Pat McFadden, the Chancellor of the Duchy of Lancaster, told Sunday Morning with Trevor Phillips there was “a serious level of engagement going on at high levels” to secure a UK-US trade deal.

However, Mr McFadden, a key ally of Sir Keir Starmer, struck a more cautious tone than Chancellor Rachel Reeves on the prospect of a US trade deal, saying: “I think an agreement is possible – I don’t think it’s certain, and I don’t want to say it’s certain, but I think it’s possible.”

He went on to say the government wanted an “agreement in the UK’s interests” and not a “hasty deal”, amid fears from critics that Number 10 could acquiesce a deal that lowers food standards, for example, or changes certain taxes in a bid to persuade Donald Trump to lower some of the tariffs that have been placed on British goods.

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And asked about the timing of the deal – following recent reports an agreement was imminent – Mr McFadden said: “We’ll keep working with the United States and keep trying to get to an agreement in the coming weeks.”

As well as talks with the US, the UK has also ramped up its efforts with the EU, with suggestions it could include a new EU youth mobility scheme that would allow under-30s from the bloc to live, work and study in the UK and vice versa.

Mr McFadden said he believed the government could “improve upon” the Brexit deal struck by Boris Johnson, saying it had caused “an awful lot of bureaucracy and costs here in the UK”.

He said “first and foremost” on the government’s agenda was securing a food and agriculture and a veterinary agreement, saying it was “such an important area for the UK and an area where we’ve had so much extra cost and bureaucracy because of Brexit”.

He added: “But again, as with the United States, there’s no point in calling the game before it’s done. We’ve still got work to do, and we’re doing that work with our partners in the EU.”

The Cabinet Office minister also rejected suggestions the UK would have to choose between pursuing a trade deal with the US and one with the EU – the latter of which has banned chlorinated chicken in its markets – as has the UK – but which the US has historically wanted.

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On the issue of chlorinated chicken, Mr McFadden said the government had “made clear we will not water down animal welfare standards with either party”.

“But I don’t agree that it’s some fundamental choice beyond where we have to pick one trading partner rather than another. I think that’s to misunderstand the nature of the UK economy, and I don’t think would be in our interests to put all our eggs in one basket.”

Also speaking to Trevor Phillips was Tory leader Kemi Badenoch, who said the government should be close to closing the deal with the US “because we got very close last time President Trump was in office”.

She also insisted food standards should not be watered down in order to get a deal, saying she did not reach an agreement with Canada when she was in government for that reason.

“What Labour needs to do now is show that they can get a deal that isn’t making concessions, so we can have what we had last month before the trade tariffs, and we need serious people doing this,” she said.

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