Seven in 10 (69%) brokers are seeing more demand for 35 year mortgages, the Intermediary Mortgage Lenders Association’s Intermediary Lending Outlook research has found.
Three quarters of brokers (77%) and lenders (74%) reckoned the growth of 35 year mortgages is an “inevitable consequence” of low wage growth and rising house prices.
Peter Williams, executive director of IMLA, said: “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).
“Recently the PRA raised concerns about longer-term mortgages and their negative impacts.
“In reality, around a third of first-time buyers take out a mortgage with a term of over 30 years and most of these are for less than 35 years.”
He added: “The majority of brokers (62%) and lenders (68%) agree that longer-term mortgages are an essential option for aspiring homeowners and would argue that this is a response to reality and remains responsible lending.
“However, this in no way lets the government off the hook in needing to act swiftly to address the housing crisis.
“With many borrowers struggling to make homeownership a reality, it is recognised that the growing recourse to longer-term mortgages could impact upon people’s capacity to save for retirement albeit this is offset to a degree by the purchase of a property asset.”