There have been fears of lengthening mortgage terms, with brokers urging regulators to crack down on the lengthening deals.
It used to be that a 20-25 year mortgage term was the maximum that you were likely to encounter, however, mortgage brokers are now worried about the extended length of the deals on offer.
Borrowers can now get terms up to 35 years, meaning that they will be shouldered with the continuous payouts for over three decades, a long time to not fully own the property you live in.
Experts from the industry are urging for this to be regulated, fearing the impact it will have further down the line when people’s incomes “drop-off” when they retire and they come to rely on a pension.
People whose only income is a pension are more vulnerable to running afoul of rising base rates and increasing interest rates.
Your Mortgage Decisions director Dominik Lipnicki said that: “Without a doubt, 30 or 35 year mortgages are becoming the new 20 and 25 year terms. People will borrow for longer as house prices continue to rocket – which they will until the supply-side issues are seen to.
“The industry absolutely needs to look at what’s going on and realise that these will become far more prominent trends the longer we continue to ignore the issue of supply.”
It is feared that the housing market will become more unsustainable and that tactics like the Help to Buy scheme only deal with the short term issues. In evidence of this, central Scotland has recently run out of funding for the scheme and it is no longer available to a large portion of the population, leaving people with little aid to afford ever more expensive housing.
