Halifax, the UK's biggest mortgage lender, has launched its first 25-year fixed-rate mortgage set at 6.39 per cent.

Brokers warned that the deal which carries a relatively high 3 per cent early redemption charge, did not offer the best value for borrowers.

The early redemption penalty applies to those who switch mortgages in the first ten years of the term.

The Government earlier this year released a green paper which called on lenders to offer a wider range of long-term fixed rate deals. It argued that borrowers would be better protected during the current climate of rising interest rates if they took out long-term loans.

However Ray Boulger, of John Charcol, the broker, said: “ Rates are near the peak of the cycle. It is the wrong time to buy a long-term fix.”

Melanie Bien, of Savills Private Finance, another broker, said: "On the good side, the Halifax deal is fully portable which means if you move within those ten years you can take the mortgage with you, as long as the lender is happy with the new place." Ms Bien adds: "There is also flexibility as you can overpay or underpay or take a payment holiday. However, I do think an early redemption charge of 3 per cent is a lot."

A borrower on a £200,000 mortgage who signs up to the Halifax's new deal will face monthly repayments of £1336.70 per month. The deal also has a £599 arrangement fee.

The early repayment fee, which is charged as a percentage of the outstanding amount of the loan, would work out at £5426 if the mortgage is closed in the fifth year.

The market has been dominated recently by short-term fixed rate deals, which revert to the lender's standard variable rate at the end of the fixed term. This effectively forces borrowers to remortgage every two or three years, meaning they repeatedly pay the upfront costs and exit fees associated with taking out a new home loan.

A broker-only 30-year deal with Manchester Building Society, available through London & Country, offers a fixed rate of 5.99 per cent, although it has a 2 per cent arrangement fee, which can be added to the loan. It is currently the only deal available for 25 years or more not to have an early repayment charge. London & Country does not charge broker fees to borrowers, who are eligible for £500 cash back if they remain with the lender for the full term.

London & Country surveyed 1200 customers and found that around half would consider a 25-year fixed rate deal. However 68 per cent they would not wish to be tied into the deal by an early repayment charge for more than five years.

James Cotton, of London & Country, said: "Our recent survey shows that whilst borrowers are attracted by the security that long-term fixed rates can offer, the ERCs that go with them are the biggest turn off. This new deal solves that problem by offering both long-term security and the flexibility that comes with having no ERCs."

Nationwide, the UK's biggest building society, recently relaunched its 25 year fixed rate deal, also at 6.39 per cent. Like the Halifax deal, the Nationwide mortgage carries a 3 per cent arrangement fee which applies in the first ten years of the loan.