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There has been a significant rise in the number of homeowners opting for mortgages with terms of up to 40 years, according to new research. 

Almost six out of 10 (58%) borrowers taking out a mortgage last year, chose a term of 25-years or longer, according to data from mortgage brokers Mojo, which partners with comparison site USwitch.

Two years previously just 44% of homeowners opted for a 25-year plus mortgage term.

The broker has also seen an increase in the number of customers opting for mortgages of 30-plus years, with 51% of its customer buying a new home last year selecting this longer term, compared to just 41% in 2021.

Meanwhile, demand for mortgages with terms of 40 years or more rose by 16% in 2023. 

USwitch mortgage expert Kellie Steed said these figures reflect wider trends across the mortgage market and indicate that the ‘average’ 25-year mortgage term is increasingly becoming a thing of the past. 

She said the demand for these mortgages  has coincided with the rising rate environment, with the longer term reducing monthly payments and helping with affordability for many homeowners. 

An increase in the term lengths has been seen across all residential purchase and remortgage customers, as well as buy-to-let purchase customers. 

However the data shows this trends has not been replicated in the buy-to-let remortgage market, with customers choosing shorter terms, on average, in 2023 than 2021. 

Steeds says this could be a result of commercial buyers having more financial flexibility than residential buyers – or that they’re able to repay mortgage balances down more quickly. It could, however, also potentially suggest that existing homeowners have been more substantially impacted by rising mortgage rates than existing landlords.

Looking at wider market data, Steed pointed to a recent study of the data from mortgage broker technology site, Twenty7Tec which found that over 70% of searches on its portal were for mortgages with terms exceeding 25 years in length. Meanwhile eExperien found that 25% of homeowners under the age of 30 now have a repayment term of 35 years or more, an increase of 150% since 2020.

Steed says that since 2021, a significant number of lenders have increased the length of their maximum terms, as well as their maximum borrowing ages. Moneyfacts data shows that 86% of the mortgages currently available have the option of terms spanning up to 40 years. However this is often dependent on the age at application. 

She adds that while it may not be possible to get a 40-year mortgage at age of 55, there is the very clear recognition from lenders that flexibility is needed in order to facilitate affordability for the average mortgage borrower in 2024.

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