The number of approved UK home mortgages with a term of more than 40 years rocketed in 2018, rising over 20-fold to 3,483 from just 162 the previous year, according to analysis by London estate agent Ludlow Thompson.
The figures are the latest sign that British buyers are lengthening their mortgages to reduce monthly payments as they struggle to afford rising house prices, which have outstripped wage growth.
UK house prices are now over 20 per cent higher than their pre-financial crisis peak. The average house price was 7.8 times higher than average yearly earnings in 2018, compared to 7.2 times in 2007.
In London the average house price was 12.3 times higher than average yearly earnings. In 2007, the figure was 7.9 times.
“The huge increase in longer term mortgages is a much-needed addition of innovation to the mortgage market,” said Stephen Ludlow, chairman at Ludlow Thompson.
“Many individuals who are getting on the ladder at 30 now expect to be working still well into their 70s so stretching their mortgage out makes perfect sense.”
Yet in March, Darren Cook, Finance Expert at finance website Moneyfacts, warned that “the additional interest that accumulates over an extended mortgage term could be considerable”.
Moneyfacts showed that 50.9 per cent of all residential mortgage products available in March had a standard maximum mortgage term of up to 40 years, up from 35.9 per cent five years earlier.
Today’s analysis of Financial Conduct Authority (FCA) figures by Ludlow Thompson reveals that growing numbers are extending their mortgage terms past 40 years.
Read more: London house prices plunge 4.4 per cent
Ludlow Thompson said high levels of competition in the mortgage business had pushed firms to react “to the demand for lower monthly outlays by providing increasingly long-term mortgage products”.