Opinion: Long-term investment plans are not 'eccentric'

Young african woman holding home keys while hugging boyfriend in their new apartment after buying re

Habito has launched the UK's first 40-year fixed rate mortgage - Credit: Getty Images/iStockphoto

According to an eighteenth century French scholar, British eccentricity could be attributed to a seemingly potent mixture “fogs, beef and beer…aggravated by the tedium of an English Sunday.”

Irrespective of whether this Gallic supposition is accurate, it’s fair to say that over the years, the British Isles have produced a larger than average share of nonconformist oddballs, bizarre cranks and eccentrics. People such as the psychiatrist who declared that lobsters could love each other; or the mermaid-impersonating vicar who invented the Harvest Festival. Colourful characters all.

Army officer Captain William Macbay was one particularly interesting example of Victorian eccentricity, an era of rich pickings if you’re searching for unconventional characters.

In 1866, he proposed building a causeway (with convict labour) between Scotland and County Down, Ireland. Macbay’s suggested method of construction was a tad unusual: He proposed tipping the hills surrounding Portpatrick in Scotland and in Donaghadee in County Down straight into the sea. Great swathes of open water, spanned by bridges, would allow shipping through. Macbay maintained that the project would be no more complicated than the building of Egypt’s pyramids.

More than a century-and-a-half later, the dream of a ‘Celtic Crossing’ has recently been revived. The Prime Minister is understood to be enthusiastic and government officials are said to be “looking into the possibility of building a form of permanent link between the UK and the island of Ireland.”

Critics argue that a Celtic Crossing would be another huge waste of money, a road and rail tunnel version of HS2 - and such scepticism is understandable.

When HS2 was first proposed, the total cost was estimated at £32 billion; today it exceeds £88 billion, a staggering miscalculation on someone’s part.

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Yes, HS2 is a complete waste of money, but a Celtic Crossing could be one of a much more useful series of public works capable of boosting Britain’s post-pandemic economy in the same way that large-scale housebuilding gave the economy an important lift, creating significant employment, during the inter-war period, 1918-39.

Highway tunnel construction site with yellow tractors

A Celtic Crossing could be one of a much more useful series of public works capable of boosting Britain’s post-pandemic economy, says Peter Sharkey - Credit: Getty Images/iStockphoto

Between 1918 and 1939, more than 3 million new homes were built in England and Wales. Council house building boomed as slums were razed, replaced by rows of relatively spacious, well-built terraced houses, replete with indoor lavatories and running hot water.

Not only did the surge in public and private house building improve the lives of millions of people, it created jobs for hundreds of thousands of men at a time when the economy was struggling in the aftermath of the Great War and would take another hit during the Depression.

Post-pandemic, it appears certain that we must either prepare to adopt a Keynesian-style economic strategy, at least over the medium term, building new homes, bridges, tunnels, motorways and our own nuclear power plants, or face the prospect of rapidly rising unemployment. Such is the damage inflicted on our economy by Coronavirus that the private sector will not be able to take up the employment slack for several years.

Expensive? You bet, but wouldn’t the ends justify the means?

This Machiavellian approach to finance (ie, the end justifies the means) is likely to be enthusiastically embraced by homebuyers after mortgage broker Habito introduced the first fixed-rate 40-year mortgage to the UK last week.

Construction industry. Timber framework of house roof trusses with scaffold on a building being buil

Building new homes, bridges, tunnels, motorways could fend of high unemployment as the UK prepares to bolster the economy after Covid-19, says Peter Sharkey - Credit: Getty Images/iStockphoto

Prospective homebuyers can fix their mortgage interest rates with Habito for up to 40 years, a significant housing market development because it enables banks to lend larger sums to property buyers in the knowledge that monthly repayments will be considerably lower than over a 25-year term.

The flipside, of course, is that if you’re borrowing over a much longer period, you’ll eventually pay more interest. However, one attractive feature of the 40-year loan is the fact that it comes with no early repayment charge, a common characteristic of long term mortgages in countries such as Germany and Denmark.

Nevertheless, Habito’s 40-year mortgage interest rates are comparatively expensive, although the company makes a point of saying they’re not for everyone.

At a 40-year mortgage interest rate of 5.35%, a £175,000 loan would cost £890.99 per month. However, for those with a modest deposit, buying over four decades offers an opportunity to get on the housing ladder and ultimately, they will own their own home. The spectre of early repayment fees are satisfyingly absent and, in real terms, the value of £890.99 will be considerably lower in 2061 than it is today.

Many homebuyers are likely to recognise the attraction of paying for their most valuable asset over a long period; ideally, whomever we have in charge of the UK’s domestic economic policy is thinking along similar lines without imagining the strategy excessively eccentric.


  • £223.7m - It may have been a Godsend for many folks, delivering extra-large pizzas or double-sized burgers throughout lockdown, but home delivery service Deliveroo lost £223.7 million last year. The company is understood to be planning a £1 billion float on the London stock exchange.
  • £20 million - In The Style is a company not many people have heard of, but Adam Frisby, who founded the firm in his bedroom, saw the value of his shares soar to £20 million last week when the company listed on London’s AIM market. Unlike Deliveroo, In The Style made profits of £3.6 million in 9 months last year.
  • 30,000 - Restaurateur Rick Stein says his nine restaurants have already taken more than 30,000 post-lockdown reservations. Let’s hope people honour their bookings and do not become any restaurant owner’s nightmare: the no-show.

Beware the spectre of inflation

Read Peter Sharkey’s blog exclusively at www.moneymapp.com/blog

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