In March, 19% of all first-time buyer loans were for periods of 35 years or more, marking the highest proportion since 2005 and more than double the rate in December 2021.

The average first-time buyer is now 32 years old, potentially indicating lifetime borrowing. Although many will shift to shorter terms as earnings increase, the figures indicate a trend towards longer-term deals among existing homeowners as well, driven by rising interest rates.

Around 8% of home movers are opting for mortgages of 35 years or longer, compared to 4% in December 2021, suggesting an increasing trend towards homeowners maintaining mortgages into their 70s. Such longer-term mortgages result in significantly higher interest payments over their duration but offer lower monthly repayments, enabling borrowers to manage higher interest rates, The Daily Telegraph reports.

Upcoming analysis from UK Finance reveals increasing consumer preference for longer-term mortgages to improve affordability, despite the mounting cost over time. Rising mortgage costs driven by Bank of England’s actions to control inflation, currently at 8.7%, are contributing to this trend.

Housing costs are set to rise further due to an unexpected increase in core inflation in April. Over half of first-time buyers are opting for mortgages over 30 years, but this trend appears to be plateauing.

The report also suggests that the effectiveness of extended mortgage terms to promote home ownership is nearing its limit. The growth in long-term borrowing, a trend since 2010, saw rapid acceleration in 2022, but as 2023 commenced, it levelled off. It is too early to say definitively, but this may signal the limits of this strategy to extend affordability and meet underwriting requirements.