A sharp rise in the number of 35-year mortgage terms among homeowners under 30 has prompted concerns about a ‘Mortgage Lifer’ generation.
New data from Experian reveals that one in four mortgages for this age group now extend for 35 years or more, up from one in 10 in 2020, marking a 150% increase.
The longer repayment period means that many under-30 homeowners may be approaching retirement before they’re able to fully pay back their mortgage loan.
This comes at a time when the average two-year fixed rate deal is at 5.99%, and a standard variable tariff is a striking 8.22%, according to L&C Mortgages.
“Our data suggests that people under 30 are looking to secure longer mortgage repayment terms to help keep monthly repayments down on their homes,” said James Jones, head of consumer affairs at Experian.
This shift coincides with a decline in overall mortgage applications. According to Experian, there was a 28% decrease in mortgage applications in July this year compared to the same period last year, traditionally a peak moving season in the UK. Applications from first-time buyers also declined by 19% year-on-year.
Jones further commented: “With high interest rates increasing the pressure on borrowers, young people may feel like they have been locked in. We’re encouraging people to consider ways that they might be able to secure better deals on their mortgage terms.”
Amid these high borrowing costs, fewer people are choosing to move, with many opting to stay in their current homes or rent instead. As for those who do manage to secure a mortgage, the long repayment terms indicate a tricky road ahead, raising questions about long-term financial stability and planning for retirement.
Jones concluded: “We’d suggest engaging with your credit score and considering whether it can be improved, even if you’re not yet looking to move. A credit score can impact everything from your eligibility to your repayment terms, as it acts as a financial track record for lenders looking to see how reliable you are.”
