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Proportion of 30-year mortgages trebles as first-timers extend loans – MHCLG

  • 09/07/2020
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Proportion of 30-year mortgages trebles as first-timers extend loans – MHCLG
The proportion of homeowners with mortgage terms of 30 years or longer has almost trebled over the last decade to account for 19 per cent of all borrowers in 2018-19.


The Ministry of Housing, Communities and Local Government’s (MHCLG) English Housing Survey showed this was a notable difference compared to 2008-9, where just seven per cent of mortgages were 30 years or longer. 

The number of first-time buyers with mortgages longer than 30 years has also increased to 45 per cent, up from a third a decade ago.

This suggests a change in affordability as the increased length in mortgage terms had little impact on the proportion of income spent on mortgages.

In 2008-9, 18 per cent of household income was spent on mortgage payments while this was 19 per cent in 2018-19. 


Homeowners among highest earners 

Homeowners in England are among the highest earners in the country, with half in the top 40 per cent of household incomes. 

Conversely, 70 per cent of social renters are within the lowest or second lowest income brackets. The survey found that private renters were distributed fairly evenly across income tiers. 


Housing costs 

Private renters have the highest housing costs, followed by mortgagors, then social renters.

The mean weekly housing costs for private renters was £200£172 per week for mortgagors, £96 per week for local authority tenants and £106 for housing association tenants. 

Furthermore, private renters spent more of their gross income on housing costs than mortgagors or social renters with a third of household income going to their rent. 

Those buying with a mortgage spent an average of 18 per cent of their household income on their mortgage, and those in local authority and housing association properties spent 26 per cent and 27 per cent respectively. 


Purchasing property 

In 2018-19, 73 per cent of first-time buyers had a deposit between one per cent and 19 per cent of the property value at time of purchase. This figure rose to 50 per cent for those who previously owned property.  

This remained flat over the decade as the same number of former property owners had deposits of one per cent to 19 per cent in 2008-9 compared to 78 per cent of first-time buyers. 

The median deposit for first-time buyers in 2018-19 was £25,000 whereas this was £38,500 for those who previously owned a property. This in an increase in value over the last ten years, where first-time buyers had a median deposit of £16,000 and previous owners a median deposit of £25,000. 

In 2018-19, 85 per cent of first-time buyers funded their deposit with savings compared to 42 per cent of previous owners. Additionally, a third of first-time buyers said parents or family put money towards some of their deposit, while just eight per cent of previous purchasers said the same. 

This indicated an increase on familial support as just 22 per cent of first-time buyers received assistance from their relatives ten years ago. 


Applying for a mortgage 

In 2018-19, 11 per cent of renters considered applying for a mortgage and of those, just 26 per cent made an application. 

For 40 per cent of those who considered applying but did not, thinking their deposit was not large enough was the main reason while 27 per cent felt they would not get approved. 


Mortgage arrears 

Just one per cent of mortgagors were in arrears in 2018-19. Of those, 61 per cent were in full-time employment and 19 per cent reported themselves as economically inactive. 

Over half of those in arrears said they made no agreements with their lenders, 16 per cent switched to interest-only and 13 per cent arranged a mortgage holiday. 

The majority of those falling behind with payments did not seek advice, with 63 per cent saying they did not ask for professional help.

For those who did look for help, 29 per cent went to their lender and seven per cent spoke to an independent advice organisation. 


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