The average age of a first-time buyer is now 32, according to Halifax, suggesting that many people are borrowing until the end of their working life or even into retirement.
While many first-time buyers will refinance onto shorter term loans as their pay rises and deals expire, figures show a rising number of existing homeowners are also turning to longer-term deals to help them cope with soaring rates.
UK Finance data also shows 8pc of home movers are taking out mortgages for terms of 35 years or more compared with 4pc in December 2021.
This suggests a growing number of homeowners are taking out mortgages that will stretch into their seventies.
Buyers and homeowners who take on mortgages of 35 years or longer will rack up thousands of pounds more in interest payments over the lifetime of the deal compared to those on shorter duration deals. However, monthly repayments will be lower, which helps people to cope with higher interest rates.
In an analysis to be published later this week, UK Finance, which represents the banking industry, will say: “In order to lower monthly payments and, thereby, improve their affordability calculations, we have seen customers increasingly take out mortgages over longer terms, an option still permitted by most lenders and also within the [City watchdog’s] responsible lending rules.”
Mortgage costs have risen sharply after the Bank raised rates a dozen times to keep a lid on inflation, which still stands at 8.7pc.
