One in five FTBs took out a mortgage of at least 35 years in 2023, compared with fewer than one in 10 in 2022, as per banking trade body UK Finance
Record house prices and higher mortgage rates have pushed first-time buyers (FTBs) into taking out loans into retirement.
One in five FTBs took out a mortgage of at least 35 years in 2023, compared with fewer than one in 10 in 2022, as per banking trade body UK Finance. Previous generations tended to borrow more than a 25-year term.
The average age of a FTB is now 34 years old, as per Savills, which indicates many mortgagors will borrow into their late sixties.
Struggling borrowers often choose longer mortgage terms in order to secure affordable monthly payments. The maximum mortgage term in the UK is 40 years.
Nonetheless, the BoE has cautioned about the growing risks posed by homeowners taking out longer mortgages as they may struggle with debt in future.
Eric Leenders, MD of personal finance at UK Finance, said: 2023 was a tough year for UK households and we expect to see continued challenges in 2024. Affordability remains a hurdle to home ownership, but pressures should start to ease gradually through this year and next.
He added: Amidst ongoing cost challenges, it is encouraging that customers do not look to be running up higher levels of unsecured debt. But we know some households will be more affected than others — if you are struggling with personal loan, credit card or mortgage repayments, please reach out to your lender as soon as possible for help.
Mortgages in arrears increased throughout 2023 to 107,250, nevertheless, this number still accounts for less than 1% of the total number of outstanding mortgages. UK Finance anticipates arrears cases to rise in 2024, but not at the same pace as in 2023.
