Research shows borrowers selecting long repayment terms
May 28, 2024 by Mark
Borrowers
A new piece of research looking into the mortgage industry has found that more than half of people who took out a mortgage during the last 12 months opted for a very long repayment term.
According to this research by Uswitch, 51% of these borrowers chose loans that have terms of repayment lasting for at least 30 years. This is a rising trend, because the figures for three years ago show that 41% were taking out loans with that sort of lengthy repayment term then. Uswitch carried out its research alongside Mojo Mortgages, a digital mortgage advice company.
Another relevant fact that was uncovered by the research was that repayment terms have increased in length for every type of mortgage borrower. When it comes to those borrowing to buy a first home, the average repayment term three years ago was 28 years, whereas by last year it had gone up to 29 years.
People applying for home mover loans and buy-to-let ones have also seen one year increases in the average repayment term. In 2021, they were 23 years and 25 years respectively. The type of mortgage where repayment terms have lengthened the most is remortgage ones, at two years.
Kellie Steed from Uswitch told FT Adviser:
“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 payments to affordable ones.”
No advisor who has CeMAP training will be surprised at this, given how much of an issue affordability is now.
Written by
Mark
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