According to information from the Bank of England, home buyers are deciding to take out longer-term mortgages in order to purchase more expensive homes.
In 2006 just 22 percent of mortgages taken out extended beyond 25 years, while the figure for 2013 was 35 percent. The Bank of England is concerned that longer mortgages could leave many people vulnerable in old age when their incomes are likely to fall.
When borrowers pay back their mortgages over more extended periods, they reduce their monthly payments but the total amount of interest owed increases by tens of thousands. The fact that such mortgages make more expensive houses more affordable also contributes to rises in house prices.
Increasingly, lenders have been trying to move people away from interest-only loans in favour of repayment mortgages. As the resulting increase in monthly payments is difficult for many to afford, longer-term arrangements have been put forward as a possible solution.
The Bank of England governor, https://www.beaconfinancialtraining.co.uk/wp-content/uploads/2020/06/cemap-online-and-classroom-training-uk.jpg Carney, has said that loan duration restrictions could be introduced if the new trend causes problems. According to Lucian Cook, a research director at estate agents Savills, there are important questions to be asked about how longer-term loans fit with borrowers’ plans to repay their mortgages after retirement, as well as their expectations of work as they head into old age.
In the current climate, more borrowers are opting to take expert advice and this has led to a surge in applications for CeMAP training in Scotland, England and Wales, with more people becoming qualified mortgage advisers.