The proportion of homebuyers searching for mortgages with terms of 30 years or more has risen 8 percentage points to 21 per cent over the past year.
Research by Mortgage Advice Bureau, using over 250,000 monthly product searches via comparison websites powered by Twenty7Tec, shows terms of 25-29 years remained the most popular in Q2. However, at 63 per cent this is a significant fall from 77 per cent a year earlier.
Just 12 per cent of homebuyers searched for terms of between 15 and 24 years while 4 per cent of borrowers searched for mortgages with terms under 15 years in Q2.
The most in-demand mortgage term for remortgage borrowers was also 25-29 years in Q2, at 76 per cent. However, like homebuyers, this is a less popular option that a year earlier, when 85 per cent opted for a term this length.
The second most popular term length among remortgage borrowers was 15 to 24 years, at 13 per cent, followed by under 15 years and 30 plus at 8 per cent and 2 per cent respectively.
Mortgage Advice Bureau head of lending Brian Murphy says: “Homebuyers are tearing up the rule book by searching for longer term mortgages to secure cheaper monthly repayments.
”However, in the long run this can add up to an extra outlay of thousands with the added interest that comes with borrowing for longer.”
Change in the percentage of homebuyers and remortgage customers seeking mortgage terms:
|Q2 2014||Q2 2015||Q2 2014||Q2 2015|
|% seeking a mortgage of <15 years||4%||4%||5%||8%|
|% seeking a mortgage of 15 to 24 years||10%||12%||9%||13%|
|% seeking a mortgage of 25 to 29 years||77%||63%||85%||76%|
|% seeking a mortgage of 30+ years||8%||21%||1%||2%|