Will 2024 be the end of the short-term mortgage? That is the question posed by Nathan Reilly, Director of Twenty7tec as he looks ahead to 2024 and the trends the mortgage advisor platform has seen throughout 2023.
Their data shows that in 2023, 70.73% of mortgage searches were for terms of 25 years and over; a trend which is on the up against a backdrop of house price rises, inflation, and economic uncertainty.
Reilly suggests that the demand for long-term mortgages has skyrocketed and dragged the majority of searches away from shorter terms.
“What would have traditionally been 25-year terms and under is now overtaken by those looking for 25 years plus. In fact, in the year 2022 to 2023, 71% of the total mortgage market was searching for a mortgage 25 years and over, with only 29% looking for under 25 years.”
The data also showed that purchase mortgage demand (for all but first-time buyers) for 40 years or more rose by 16%. All other search term demand dipped. Remortgage searches saw the biggest rise with searches for 40 years or more increasing by 55%. The trend is most acutely seen amongst first time buyers where searches for 40 years or more were up 44%.
“What’s perhaps most interesting about these figures is that the biggest rise is for remortgage searches as this group will have already had a term for at least two years, and they are seeking long-term mortgages as an option to bring payments down.
Adds Reilly
“Will this be a continued change in 2024? Time will tell, but the data certainly points in that direction. House buyers are actively seeking ways to bring their monthly payments down as other payments soar, and extended terms may be one way to do that. However, longer-term mortgages can also increase the total debt size and take far longer for house buyers to pay it off, leaving some unable to be mortgage-free until they’re retired.
