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Cml: Nearly 60% Of Ftb's Mortgage Over 25 Years

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https://www.cml.org.uk/news/news-and-views/affordability-bites/

  • Our data shows that mortgage repayment terms are continuing to get longer. Nearly 60% of first-time buyers now take out a loan lasting for more than 25 years.
  • The trend towards borrowing over longer terms also extends to movers and those remortgaging.
  • Although pension freedoms and the fact that we are living longer will be influences, the main reason for lengthening terms appears to be related to borrowers stretching their incomes to get on the housing ladder.
  • There are other ways of coping with affordability problems, including borrowing at higher income multiples. But when the Financial Policy Committee introduced new limits on this, there was an immediate lessening of lender appetite to advance mortgages at higher income multiples.

Among first-time buyers, the proportion of borrowers taking out loans with a maturity of more than 25 years has continued to increase and now accounts for nearly 60% of the total, roughly double that of a decade ago.

The median term for first-time buyers has, in fact, lengthened from 25 to 30 years within just a few years. Although greater pension freedoms and the fact that we are living longer will be influences, the quantum nature of the shift suggests that it is mainly to do with stretching incomes to get on the housing ladder.

Thirty years of debt at mind bending prices with warning signs flashing red in a flat global economy. *gulp!*

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Scary shit but it can get much worse. Negative interest rates, multi generational mortgages the list goes on. This has nothing to do with free markets anymore and everything to do with the biggest countries all needing this to happen, so it does.

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Scary shit but it can get much worse. Negative interest rates, multi generational mortgages the list goes on. This has nothing to do with free markets anymore and everything to do with the biggest countries all needing this to happen, so it does.

Governments can't always achieve what they want.

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What about a mortgage that instead of decreasing over time as you pay it off - actually increases over time in line with lovely HPI?

Take out a small mortgage of £225k on a £250k house (a conservative 90% LTV) - after 2 years the value has gone up to £300k. New mortgage is £270k and you get a well deserved £45k to spend.

To avoid people wasting the money - you can only spend it on new cars, sofas, kitchens or bathrooms.

In 40 years - sell the house for 8 squillion quid to downsize and pay off the mortgage - or let your children inherit it!

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