A record number of people took out 30-year mortgages in the second quarter of 2014, according to data analysis by the Council of Mortgage Lenders.
With the death of interest-only mortgages following the collapse of the housing market in 2008, meant the cost of repayments mortgages would give consumers little choice but to increase the “standard” 25 year mortgage terms to meet new affordability tests and stricter lending criteria.
When you compare the second quarter of 2005, when only 5 per cent of mortgages were over 30 years to the second quarter of 2014, when 19,300, or 20 per cent of house purchase loans, had a term over 30 years, it just proves how the withdrawal of interest-only mortgages and tighter lending rules have forced consumers to spread the loan over a longer term.
This is increase in the second quarter is compared to 27,000, or 18 per cent, in the previous quarter. The number of consumers opting to take out mortgages over 35 years was 3800, or 2 per cent, for the second quarter of 2014, compared to 3400, for the first quarter. The Council of Mortgage Lenders (CML) latest data also found that of the total 79,900 first-time buyers in the first quarter of 2014, 22,600 had opted for mortgages over a 30-year term which equated to 28 per cent of the total.
|Time Period||Number Of House Purchases||Term Over 30 Years||Percentage Over 30 Years|
Consumers shouldn’t be put off by taking out a mortgage over 30 to 35 years as it can be a prudent move, helping keep costs down because you can always make overpayments to help reduce the overall length of the mortgage. Obviously, everybody’s situation is different and I would always recommend speaking to a financial advisor, but most I have spoken to are not against the idea.