40 Year Terms dominates UK Market - just saying

W

WizardDr

Registered User
Messages
1,575

Extended mortgage terms dominate the market​



Over two-thirds of residential mortgages offer a term of 40 years.

Traditionally, mortgages would last for a 25 year term. But in a higher interest rate environment, more lenders are increasing this part of their deals. According to Moneyfacts’ data, about 68% of residential mortgages now accommodate terms up to 40 years, up from the 57% seen this time last year.

Increasing your mortgage term does mean you’ll pay less on your monthly repayments, and it could make it easier for first-time buyers to get a foot on the property ladder. However, it does mean your overall interest will rise.

Read the full story
 
According to Moneyfacts’ data, 68% of the residential mortgage market accommodates a maximum term of 40 years.
Click to expand...
This sounds like it means that 68% of lenders provide 40 year mortgages as opposed to 68% of outstanding mortgages being 40 year terms? That being the case, this assertion may not hold up:
40 Year Terms dominates UK Market
Click to expand...
BTW the link above seems to be going through some odd redirect so this is the direct link:
moneyfactscompare.co.uk

Should I Increase My Mortgage Term? | moneyfactscompare.co.uk

According to Moneyfacts’ data, 68% of the residential mortgage market accommodates a maximum term of 40 years. So, is it a good idea to increase your mortgage term? And could extending your term be made easier through the Mortgage Charter?
moneyfactscompare.co.uk moneyfactscompare.co.uk
 
Last edited:
A few points

As ClubMan points out, it seems to mean that 68% of mortgage products could be for 40 years.

I doubt if a majority of mortgages are for 40 years.

And even if people take out 40 year mortgages, most will be paid off early.

I see nothing theoretically wrong with mortgages of indefinite duration i.e. interest-only mortgages.

They are similar to renting.

In practice, they facilitated reckless borrowing during the last boom. But if lenders apply Loan to Income and Loan to Value limits, they are probably ok.

Brendan
 
It is clear that "more lenders are increasing this part of their deals" and I don't see how you two could see that this was asserting something else.

The fact is UK lenders are offering 40 year terms and so long as property prices remain elevated this is one way of accommodating people that otherwise would not qualify.

Similarly inter-generational mortgages are another way of accommodating people that otherwise would not qualify.

If we had supply increasing after radical planning changes we might get property prices down - no time soon.
 
WizardDr said:
"more lenders are increasing this part of their deals"
Click to expand...
That is not in the current version of the article.

The article is poorly written.

According to Moneyfacts’ data, 68% of the residential mortgage market accommodates a maximum term of 40 years

Not sure what that means
If it meant 68% of residential mortgages are for 40 years, they should really have said so.

I am guessing, and it's only a guess, that it means that the option is there if people want to take it.

Brendan
 
WizardDr said:
It is clear that "more lenders are increasing this part of their deals" and I don't see how you two could see that this was asserting something else.
Click to expand...
Because your thread title and the (original?) article headline clearly assert something else...
40 Year Terms dominates UK Market - just saying
Click to expand...
WizardDr said:

Extended mortgage terms dominate the market​

Click to expand...
Almost like clickbait - and switch.
 
I am slightly bemused - the opening part of my post was taken from Moneyfacts and the link was attached.

I had no doubt at all what it meant and I never reached the conclusion that it was all mortgages in UK.

The point of posting was to draw attention to developments in the UK market and yet you three are picking away at the post instead of dealing with the issue of 40 year mortgages.

Is it a wonder people get frustrated with the tone of some of the replies.

{ i have always argued that the pathetic supply side constraint by inane planning laws is the greatest contributor to the mess -]
 
ClubMan said:
Because your thread title and the (original?) article headline clearly assert something else...


Almost like clickbait - and switch.
Click to expand...
Clearly most Moneyfacts readers would have known what the title and article meant.
 
Last edited:
WizardDr said:
I am slightly bemused - the opening part of my post was taken from Moneyfacts and the link was attached.
Click to expand...
I was slightly bemused when the article linked seemed to say something very different to what the thread and (original?) article title says.
WizardDr said:
I had no doubt at all what it meant and I never reached the conclusion that it was all mortgages in UK.
Click to expand...
You did say that the market was "dominated" by 40 year term mortgages.
WizardDr said:
DIRT is a final liability tax, meaning that the financial institution deducts the tax before they pay you the interest. You can
Click to expand...
?
WizardDr said:
Clearly most Moneyfacts readers would have known what the title and article meant.
Click to expand...
Nothing clear about that at all.
 
ClubMan said:
I was slightly bemused when the article linked seemed to say something very different to what the thread and (original?) article title says.

You did say that the market was "dominated" by 40 year term mortgages.

?

Nothing clear about that at all.
Click to expand...
It was clear and you are missing the whole point.
 
There are c.340 mortgage lenders in the UK market. 40 year mortgages have always been available.

During the full year 2022, 17% of first time buyers in the UK took out a mortgage with a term greater than 35 years. The average term for all FTBs was 31 years.
 
RedOnion said:
There are c.340 mortgage lenders in the UK market. 40 year mortgages have always been available.

During the full year 2022, 17% of first time buyers in the UK took out a mortgage with a term greater than 35 years. The average term for all FTBs was 31 years.
Click to expand...
Just curious - are there stats available on the original contracted term of all outstanding mortgages by any chance?
 
ClubMan said:
Just curious - are there stats available on the original contracted term of all outstanding mortgages by any chance?
Click to expand...
Not for all outstanding, or at least not that I see. The data tends to be compiled annually on all drawdowns that year, so you can see trends over time. I don't spend much time looking at UK data, so there might be more available.

Here's a report from last summer that includes a timeline trend of mortgages over 30 years:
www.ukfinance.org.uk

Half of new first-time-buyer mortgages have terms over 30 years, up from a quarter ten years ago

Read the latest news and insights from UK Finance: Half of new first-time-buyer mortgages have terms over 30 years, up from a quarter ten years ago
www.ukfinance.org.uk www.ukfinance.org.uk

UK Finance compile lots of data, but access requires registration.
I don't think the BOE MLAR date includes term, but worth checking.

Just remember the UK market is a lot more active than here, by design people switch / refinance constantly.
 
I don’t look at industry reports but BoE data isn’t great on this point. They don’t seem to have share of new lending by mortgage term for example.


There is a trend back toward variable rates it seems in 2023, but still only 16% of gross advances.
 
RedOnion said:
As it happens, there's an article in the Guardian on this topic yesterday. Latest data from Experian shows quarter of buyers who are under the age of 30 are selecting a term of 35 years or longer.

www.theguardian.com

One in four new UK homeowners opt for ‘marathon mortgages’ to cut payments

Buyers under 29 choosing at least 35-year repayment terms to bridge gap between rising living costs and high asking prices, says Experian
www.theguardian.com www.theguardian.com
Click to expand...
And the Guardian Sub-Editor has translated that into a headline of:



One in four new UK homeowners opt for ‘marathon mortgages’ to cut payments​


Ignoring the 'under 30' component.
 
You must log in or register to reply here.
Back
Top