New research from the Bank of England has revealed that one in four mortgages will end when the mortgage borrower is in retirement, as more people are extending their mortgage term length in a bid to make repayments more affordable.
In response to this data mortgage comparison website Uswitch has shared its own findings.
Over half (51%) of mortgage borrowers now opt for a 30-year mortgage or longer.
From 2021 to 2023, the average mortgage term length for a first-time buyer has increased by 1 year, from 28 years to 29 years.
Remortgaging has seen the biggest increase in average term length:
In 2021, the average mortgage term for remortgaging was 21 years.
In 2023, the average mortgage term for remortgaging increased to 23 years, an increase of 2 years.
The average property now costs seven times the average person’s salary. This is significantly higher than the four to five times salary cap that many mortgage lenders use as a guideline.
Uswitch mortgage expert Kellie Steed commented: “According to the Zoopla house price index, the current average property value in the UK is £264,500, which means someone on an average salary (£34,900) would need to borrow more than 7 times their annual salary to take out a large enough mortgage to buy it. The vast majority of lenders cap their lending way below this, at around 4-5 times annual income.”
She adds: “It’s unsurprising, therefore, that many are resorting to ‘mammoth mortgage’ terms in order to stretch their affordability to the absolute maximum. However, first-time buyers are not the only ones affected. There has been a less significant, but certain increase in average mortgage term lengths across the board since the Bank of England base rate began to rise in December 2021.”
