Borrowers will be able to fix their interest rate at 6.39% for the full 25-year term, with Nationwide saying the mortgage provides a mixture of "stability and flexibility" for borrowers.
But mortgage experts have warned that 25-year mortgages can be expensive and are not suited to every borrower. "Fixed-rate 25-year mortgage interest rates are a little off the pace," said Andrew Montlake, director at mortgage brokers Cobalt Capital.
"We are near the top of the interest rate cycle. People going for one of these 25-year deals may end up counting the cost soon. What's more, they are not flexible. In Nationwide's case if the borrower wants to switch provider within 10 years they have to pay a hefty penalty," Mr. Montlake added.
The Government wants to encourage lenders to offer more long-term fixed-rate deals as they feel it is key to providing greater stability into the housing market, as they offer a better alternative to short-term fixed-rate mortgages, which account for a large proportion of all mortgage deals.
Debt advisers are concerned that many short-term fixed-rate mortgages, which were taken out when rates were historically low, are coming to an end.
As a result, many homeowners could soon have to meet the cost of the five UK interest rate rises which have happened August 2006. This could lead to increasing mortgage arrears and even instability in the housing market.
Fixing mortgages for a 25-year terms could prevent this situation from happening, but currently only a handful of lenders offer 25-year fixed mortgages.
But the Nationwide believes that there is strong consumer desire to fix mortgage interest over the long term.
"Our experience is that the 25-year fixed rate has a place in the market and offers long-term stability and flexibility for borrowers who want to protect against fluctuations in interest rates," Stuart Bernau, Nationwide's executive director, said. "The relaunch of this product follows a very successful uptake earlier in the year and will allow even more borrowers to benefit from the advantages it offers," he added.