The number of mortgages being sold with terms of 35 years or more has increased by 70% over the past year, analysis of FCA data suggests.

Quilter used Freedom of Information (FOI) requests to track the number of 35+ year mortgages sold in March 2021 compared to March 2020, 2019 and 2018. 

The findings reveal that there were 14,683 such mortgages arranged in March 2018,  14,765 in March 2019 and 14,383 in March 2020.

In March 2021 long-term mortgage sales jumped to 25,112,

The surge in 35+ year mortgage sales was partly driven by higher overall mortgage volumes in March as buyer’s rushed to beat the original stamp duty holiday deadline at the end of that month.

Quilter mortgage expert Charlotte Nixon says: “Over the past few years, we have seen an increase in the number of mortgages sold with terms of 35 years or higher. 

“In March 2021, sales increased to the highest figure seen for the past three years.  

“Following an overall decrease in sales in the first few months of the pandemic, the government’s introduction of the stamp duty holiday caused a rush to the housing market to snap up deals. 

“The savings made with the removal of stamp duty, as well as lockdown-driven ‘accidental’ savings, may have allowed buyers to purchase higher cost homes than they would have expected.

“Ultimately, this rush to buy has pushed house prices up significantly across the country and may have contributed to the upswing in buyers opting for longer term deals.

“For some borrowers, particularly first-time buyers, securing a mortgage with a 35+ year term could be the only way to afford a property due to the lower monthly repayments. 

“However, it is important that the risks of such long mortgage terms are properly understood.

“One of the largest knock-on effects of securing a mortgage with a term of 35+ years is that the longer the mortgage term, the older you will be when making the final repayment. 

“This means that people are likely to be borrowing beyond their retirement age. 

“Whilst some mortgage providers allow this, paying a mortgage in retirement can have a major impact on standard of living with many people becoming unable to comfortably afford the repayments.

“Additionally, whilst a mortgage with a term of 35+ years can result in lower monthly repayments, you are likely to pay considerably more in interest over the course of your mortgage term.

“However, whilst there are risks to longer term mortgages, certain types of these products allow you to make overpayments.

“This can serve to make repayments past retirement age more manageable. 

“Overpaying will also reduce the amount of interest paid over the term length.

“Seeing a mortgage adviser is very important if you are looking to commit to a 35+ year term. 

“An adviser can help you find the best product for your unique financial circumstances and ensure a mortgage product has the flexibility to overpay without being penalised. 

“Having this ability will allow you to pay more off your mortgage if you are in a position to do so and ultimately reduce your term.”