More longer-term mortgages being taken out, FCA finds
More people are opting for 30-year mortgages and increasing numbers will still have a mortgage when they reach retirement age, according to a new study.
The Financial Conduct Authority (FCA) have released their new Sector Views report, which reveals that 34% of first-time buyers (FTBs) who took out a mortgage in 2017 opted for a deal lasting 30 years. That’s significantly higher than the 20% reported a decade earlier, and tallies with other studies.
In early 2018, the English Housing Survey found that the numbers of people choosing longer-term mortgages had risen by 40%. The numbers of people opting for a 20 to 29-year deal had fallen, driven by a desire to reduce monthly payments while still trying to get a foothold on the property ladder.
Looking long term becomes increasingly popular
The FCA now show that deals lasting 30 years or more are the most popular option for FTBs, while that title belonged to 20 to 25-year mortgages in 2007. They also find that 40% of people who bought a home in 2017 will be aged 65 or more when their mortgage matures.
A Which? report in September last year found that around half of lenders said they were offering deals of 40-years, but not all data pointed towards high take-up of such offers. According to UK Finance, in the first half of 2018, only 4% of mortgage approvals were on terms of 36 years or longer.
The FCA’s new study also flags up the rise of mortgages taken out on increasingly high multiples of a borrower’s income. It finds that a quarter are now on at least four times income – only last month, Barclays became the latest lender to offer up to five times income if borrowers are on at least £30,000 and have a 20% deposit.
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