The rising trend of mortgage terms exceeding three decades, highlighted by credit agency Experian, means that many homeowners will be approaching retirement before they are able to pay their mortgage loan in full.
Experian says that younger borrowers are turning to longer mortgage repayment terms to help them cope with higher monthly mortgage payments.
The average two-year fixed rate is 5.99 per cent and the average standard variable rate is 8.22 per cent, according to L&C Mortgages.
The credit agency’s analysis found that there was a 28 per cent decrease in mortgage applications in July this year, compared to the same month in 2022 which it said suggests borrowers might be choosing to stay in their existing locations or rent rather than buy a new property due to the current high interest rates on loans.
Applications from FTBs fall
Mortgage applications for first-time buyers were also down 19 per cent on last year.
James Jones, head of consumer affairs at Experian, said: “Our data suggests that people under 30 are looking to secure longer mortgage repayment terms to help keep monthly repayments down on their homes, and this could also be affecting property buying among house hunters.
“With high interest rates increasing the pressure on borrowers, young people may feel like they have been locked in, so we’re encouraging people to consider ways that they might be able to secure better deals on their mortgage terms. We’d suggest engaging with your credit score and considering whether it can be improved, even if you’re not yet looking to move.”
