The latest research indicates that increasing numbers of those looking to secure a mortgage for a first home are favouring loans with terms of repayment that last for a minimum of 35 years.
UK Finance carried out this research, which shows that first-time homebuyers are keen to offset rising interest rates with longer terms of repayment. 19% of people getting a mortgage to buy a first home opted for a 35-year minimum repayment term during March 2023, which marks a new record. By contrast, back in 2005, only 2% of first-time homebuyers chose a mortgage of that sort of length.
In March of 2022, the percentage of those buying a home for the first time that took out a mortgage lasting for 35 years or longer was 9%. This indicates that it is the inflation and rising rates of the past year that are driving the demand and that first-time homebuyers will continue to seek out long-term mortgages for as long as the current inflation and cost of living crisis continues.
Furthermore, although the trend is particularly pronounced among this segment of the borrowing market, it is not restricted to them. Rising levels of demand for very long-term mortgages are apparent among all borrowers, with 8% of those moving house now seeking them out compared with just 1% back in 2005.
This is a trend that mortgage advisors who have a CeMAP qualification will want to pay attention to when they are looking for lenders, so they can prioritise those offering longer repayment terms.
