One in five first-time buyers taking out mortgages lasting over 35 years

Around one in five first-time buyers are taking out mortgages lasting more than 35 years as interest rates rise, according to industry figures.

A record 19% of first-time buyers took out mortgages lasting at least 35 years in March, the figures from trade association UK Finance show.

This is the highest proportion in its records going back to April 2005.

A year earlier, in March 2022, just under one in 10 (9%) first-time buyers were taking on mortgages lasting more than 35 years.

In 2005, when the records started, this proportion was just 2%.

The proportion moved into double digits in June last year, when it hit 10%, and has been steadily climbing.

Longer mortgage terms can make monthly payments more manageable, but borrowers can end up paying more in interest.

Stretched mortgage terms could also affect some borrowers’ plans for retirement.

Mortgage rates have been rising as the Bank of England base rate has climbed.

Swap rates, which underpin fixed-rate mortgages, have been fluctuating recently amid expectations for inflation. There was also a jump in mortgage rates last autumn as the markets reacted to the mini-budget.

Many existing homeowners are yet to feel the pain from increased mortgage rates, as they are currently sitting on fixed-rate deals. Some could be in for a payment shock when they eventually re-mortgage.

A survey of 2,000 people by Opinium, carried out for Hargreaves Lansdown in May, found that nearly half (48%) of those with a mortgage said they would struggle if their monthly repayments rose by £150.

Sarah Coles, head of personal finance, Hargreaves Lansdown, said: “Anyone who bought after the rate hikes of the late 1980s won’t have had to deal with rises at this kind of speed before, so there’s a risk they won’t have factored it into their plans at all.”

Borrowers who are worried about struggling with their mortgage repayments should speak to their lender as soon as possible to discuss their options.