Following analysis of its October mortgage market statistics, Twenty7tec has revealed that more than half of all mortgage searches on its platform are for terms of 30 years or more.
Additionally, demand for 40+ years has doubled in the last two years: 11.8% (December 2021) up to 22.02% (October 2023). Twenty7tec CEO James Tucker stated that “marathon mortgages” are becoming “increasingly commonplace”. He continued:
“Since Habito offered UK homebuyers their first 40-year fixed-rate mortgage in March 2021, long-term mortgages have taken the market by storm. The cost-of-living squeeze has undoubtedly played its part, and more providers, notably HSBC, are entering the market at the end of August. It is harder for prospective buyers to afford the monthly payments on a traditional 25-year deal, and home buyers needed an alternative. Back in December 2021, interest rates were 0.25%. They’re now levelling off at 5.25%.
The combination of smaller deposits or lower monthly payments when rental costs are soaring will certainly appeal to many, and these extended terms may be the only way for some people to get their feet on the housing ladder. However, longer mortgage terms can also increase the total debt size. In some cases, the home buyer won’t be mortgage-free until they are nearing retirement, so careful consideration is necessary.”
