- The ratio hit a new record as home purchases peaked in late 2023.
Almost one in four first-time buyers have taken out mortgages with terms of more than 35 years after a rise in borrowing costs.
Figures from trade body UK Finance showed the ratio hit a new record, as mortgage rates on completed home purchases peaked at the end of 2023.
They showed that 23 per cent of all mortgage loans taken out by first-time buyers extended for more than 35 years, up from 17 per cent a year earlier and just 9 per cent when the Bank of England began raising lending rates. interest at the end of 2021.
Longer-term mortgages may make monthly payments more affordable, but in the long term they will mean racking up thousands of pounds more debt, which could extend into retirement.
UK Finance said it was a change from the past, when 25-year mortgages were “pretty much the norm” (file image)
The Bank of England began raising interest rates at the end of 2021 (file image)
Loans over 30 years now account for more than a third of first-time buyer transactions.
UK Finance said it was a change from the past, when 25-year mortgages were “pretty much the norm”.
“We are seeing a continuous and faster rise in debt for more than 35 years,” a spokesperson said.
‘When customers use ‘extended term’ to improve affordability, they need to extend the term even further.
‘Many borrowers were still unable to pass affordability tests, leading to the significant contraction in lending volumes we saw last year.
At the end of last year, around five million mortgage holders had not yet refinanced their loans at higher interest rates.
The Bank raised rates from 0.1 percent to 5.25 percent, although investors expect the base rate to start falling later this year.
