Just over half (51 per cent) of mortgage borrowers have opted for a term of 30 years or more in the past year, research from Uswitch has revealed.
The research, in partnership with online mortgage advisers Mojo Mortgages, found this trend has grown in recent years as, in 2021, just 41 per cent of borrowers chose longer term mortgages.
Additionally, mortgage terms were found to have increased across all mortgage applicants, such as first-buyer buyers whose average term length rose from 28 years in 2021 to 29 years in 2023.
Home mover and buy-to-let mortgage applicants also saw their average term rise by a year, increasing from 25 to 26 and from 23 to 24 respectively.
Remortgages recorded the largest increase in average term, rising by two years from 21 to 23.
Uswitch mortgage expert, Kellie Steed, said: “Put simply, the longer your mortgage term, the smaller your monthly repayments.
“Borrowing the same amount over a longer term stretches your affordability, potentially reducing monthly repayments to affordable ones.
“After analysing Mojo Mortgages’ data, we can reveal that in 2023, the average first-time buyer borrowed £189,693 at an interest rate of 5.27, over a term length of 29 years. Their monthly mortgage repayments stood at £1,065.
“However, if they were to extend their mortgage terms to 40 years, this would decrease their mortgage payments by £116 per month.”
Steed also spoke on the affordability challenges that were currently facing homebuyers, describing the current gulf between prices and salaries.
“According to the Zoopla house price index, the current average property value in the UK is £264,500,” she explained.
“This means someone on an average salary of £34,900 would need to borrow more than seven times their annual salary to take out a large enough mortgage to buy it, but the vast majority of lenders cap their lending way below this, at around 4-5 times annual income.
“It’s unsurprising, therefore, that many are resorting to ‘mammoth mortgage’ terms in order to stretch their affordability to the absolute maximum.”
tom.dunstan@ft.com
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