35 year mortgage deals growing among younger borrowers

New data from the Bank of England has revealed that one in six borrowers is taking out a mortgage lasting 35 years or more

1 in 6 taking a mortgage term longer than 35 years


New data from the Bank of England has revealed that on in six borrowers is taking out a mortgage lasting 35 years or more.The figures have prompted concerns that many homeowners will be left making repayments until they are in their 70s, well into their retirement.According to the figures published by the Bank of England, 15.75 of all new mortgages taken out in the first quarter of this year were for repayment terms of at least 35 years. This is down slightly on the high of 16.36% recorded at the end of 2016, but is part of an overall upward trend for these deals in recent years.In mid-2005, only 2.7% of new mortgages agreed were for 35 year terms. During the same time, the proportion of new mortgages with terms between 30 and 25 years has also grown, now amounting to just under 20% of the total.As many households find their incomes squeezed between stagnant wages and the rising cost of living, and with many younger borrowers also having to cope with hefty student loan repayments, longer mortgage deals are appealing because they keep down monthly repayments. Jonathan Harris, from mortgage broker Anderson Harris, said; “The typical 25 year mortgage term is a thing of the past, particularly when it comes to first time buyers, owing to tougher affordability criteria.”Homeowners with longer repayment periods will, however, find themselves paying much more, potentially tens of thousands of pounds, over the lifetime of the mortgage and could be making repayments into their retirements when their income could be significantly reduced after leaving work.The figures follow warnings from the Bank of England of a ‘spiral of complacency’ on the part of UK lenders about growing levels of indebtedness among borrowers.Alex Brazier, the Bank’s director for financial stability, said last week that there were signs of lenders think risks were lower than they are following a prolonged period of low losses on loans.According to Brazier; “Lenders have not entered, but they may be dicing with the spiral of complacency. The spiral continues, and borrowers rack up more and more debt. Lending standards can go from responsible to reckless very quickly. The sorry fact is that as lenders think the risks they face are falling, the risks they, and the wider economy, face are actually growing.”

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