View more on these topics

Brokers see rising demand for 35-year terms: IMLA

Mortgage, scrabble, stock

Most brokers are seeing rising demand for 35-year mortgages, according to the Intermediary Mortgage Lenders Association.

More than one in ten (13 per cent) reported a ‘substantial’ increase in the first six months of 2017, an IMLA survey reveals.

More than three-quarters of brokers (77 per cent) and 74 per cent of lenders say increase in demand for 35-year term mortgages is an “inevitable consequence” of low wage growth and rising house prices.

One in six (16 per cent) of brokers think it will limit people’s capacity to save for retirement.

However, IMLA says the mortgage industry sees the need for 35-year terms.

Sixty-two per cent of brokers and 68 per cent of lenders think longer-term mortgages are important for aspiring homeowners.

IMLA executive director Peter Williams says: “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).

“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.”

Williams says the move to longer terms should not let the Government off the hook in addressing the housing crisis.

He adds: “With many borrowers struggling to make homeownership 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.

“In order to prevent retirement saving and homeownership becoming mutually exclusive, government and policymakers have a responsibility to tackle the root of the chronic supply/demand crisis facing the UK.”



Teachers BS hikes maximum term to 40 years

Teachers Buildings Society has extended its maximum mortgage term to 40 years. The building society has increased the maximum term available on its products by five years. The Society hopes the move will help bring down monthly repayments for buyers battling rising house prices. Intermediaries in the building sector also say a 40-year term can […]

Comment: Focus on long-term property trends

Any comparison of today’s scenario with the financial crisis and its effect on the housing market is just scaremongering Property has been one of the safest and most profitable long-term investments of the past 50 years. Anyone who hopped on the housing ladder in the 1970s or ’80s will have seen their initial investment returned […]


Trade bodies defend longer-term mortgages after PRA warning

Mortgage lender trade bodies have defended the trend towards longer-term mortgages after the practice was criticised by the Prudential Regulation Authority yesterday. PRA chief executive Sam Woods has warned against 35-year mortgages as part of a wider criticism of lenders not complying with the “spirit” of regulation. Woods says longer-term loans cut monthly instalment amounts […]


News and expert analysis straight to your inbox

Sign up