Longer mortgages of 30 years and over are becoming a reality in the UK as demand soars due to rising house prices, inflation and low wage growth, a new report suggests.
The majority of independent mortgage brokers believe that the rise in demand for longer home loans is inevitable and not likely to slow, according to the latest report from the Independent Mortgage Lenders Association (IMLA).
Overall some 69% of mortgage brokers report an increase in demand for 35 year mortgages with 13% reporting a substantial rise in demand in the first six months of 2017.
Some 77% of brokers and 74% of lenders say increase in demand for 35 year term mortgages is an inevitable consequence of low wage growth and rising house prices and the industry believes such lengthy loans must be on offer although there are concerns about their impact on capacity to save for retirement.
‘In recent years, rising house prices, inflation and low wage growth have put significant pressure on prospective buyers’ incomes, meaning that many would-be borrowers now have to spread their payments out for longer periods in order to get a loan and to qualify for a mortgage under the affordability tests now in place,’ said Peter Williams, executive director of the IMLA.