Poll
69% of brokers report increase in demand for 35-year mortgages
Nearly seven out of 10 mortgage brokers (69%) have reported an increase in demand for 35-year mortgages, according to a new study.
The Intermediary Mortgage Lenders Association’s (IMLA) latest Intermediary Lending Outlook research found that 13% of mortgage brokers had seen a “substantial” increase in demand during the first six months of 2017.
More than three-quarters of brokers (77%) and 74% of lenders felt the increase in demand for 35-year mortgages was an “inevitable consequence” of low wage growth and rising house prices.
“In recent years, rising house prices, inflation and low wage growth have put significant pressure on prospective buyers’ incomes, meaning that many would-be borrowers now have to spread their payments out for longer periods in order to get a loan (and to qualify for a mortgage under the affordability tests now in place),” said Peter Williams, executive director of IMLA.
“Recently, the PRA raised concerns about longer-term mortgages and their negative impacts.
“In reality, around a third of first-time buyers take out a mortgage with a term of over 30 years and most of these are for less than 35 years.”
Peter added that 62% of brokers and 68% of lenders agreed that longer-term mortgages were an essential option for aspiring homeowners and would argue that this was a response to reality and remains responsible lending.
“However, this in no way lets the government off the hook in needing to act swiftly to address the housing crisis.
“With many borrowers struggling to make home ownership a reality, it is recognised that the growing recourse to longer-term mortgages could impact upon people’s capacity to save for retirement, albeit this is offset to a degree by the purchase of a property asset.”
One in six (16%) of brokers and lenders were worried that 35-year mortgages would limit people’s capacity to save for retirement.
“In order to prevent retirement saving and home ownership becoming mutually exclusive, government and policymakers have a responsibility to tackle the root of the chronic supply/demand crisis facing the UK,” added Peter.
“Theresa May’s housing summit at Number 10 is recognition of that and working in tandem with the industry, we would hope the government can move forward to improve housing supply and the life prospects of generation rent.”
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