Shadow Chancellor Rachel Reeves says first time buyers could benefit from a “revolution in home ownership” with 25-year fixed-rate mortgages.

Reeves says longer fixed-rate deals would allow people to buy with smaller deposits and lower monthly repayments. She says a a Labour review of financial services, to be conducted before this year’s General Election, will look at how to remove regulatory barriers and to start a broader cultural shift towards long term fixed rates, which are commonly available in some other countries such as Canada and Japan.

With Labour’s “revolution”, a “10, 25-year mortgage” would allow first-time buyers to be less financially impacted than they are in the current system, and reduce instability in the housing market, says Reeves.

“If you are locked in for a 10, 25-year mortgage, those stress tests become redundant. Potentially you would be able to borrow a bit more, to put down a bit less of a deposit. If you can take out some of that stress and instability, that will make a difference” she has told The Times newspaper.

Reeves adds that she would be reluctant for taxpayers to support lenders to underwrite long term fixed rates, but instead she wants a cultural shift away from the current two and five-year fixed mortgages.

Last summer Housing Secretary Michael Gove hinted at a similar move. 

Acknowledging that it was becoming “more difficult to have access to mortgage finance”, Gove told the Daily Telegraph last June that longer-term fixed deals could be the answer to ending unpredictability faced by homeowners.

“One of the things that is right for levelling up over all is making sure we can develop the types of products that are elsewhere in the world, particularly countries like Canada – which are long-term, fixed-rate mortgages, so you don’t get the oscillation of how much you pay every two or five years, but you have certainty over as long as 25 years on what you pay.”