Getting onto the property ladder has become harder in recent years and that’s had a noticeable impact.
People are now buying their first homes later in life and they’re choosing longer mortgage terms to make monthly payments more manageable.
According to research*, in 2019-20 just 3.6% of first-time buyers (FTBs) with a mortgage were aged 45 or older. By 2023-24, this figure had nearly tripled to 11.5%. Also, more borrowers are opting for longer mortgage terms.
Around 84.9% of FTBs are taking out mortgages that are 25 years or more, while nearly one in three are signing up for 35 years or longer. This means that about 547,000 of those who stepped onto the property ladder in 2024 will still be paying off their mortgage in their 60s.
More mortgages for lower incomes
Longer terms are increasingly common because they’re often the only way that people can afford to buy a home.
In July, the Bank of England advised that lenders can offer more mortgages that are over 4.5 times a borrower’s income. HM Treasury expects this to create up to 36,000 additional FTB mortgages over the first year.
Jinesh Vohra, CEO at Sprive, said: “We’re seeing the emergence of a perfect storm. People are getting on the ladder later in life – many because they are ‘wait to inherit’ buyers who are stuck renting into their 40s, hoping for financial support or inheritance to break in.
“Then when they finally do so, they are paying more than ever for homes, and now face the risk of losing income security due to AI’s disruption of traditional jobs.
“Carrying mortgage debt into retirement is becoming the norm – but it’s incredibly dangerous when future income is uncertain. If your mortgage runs until you’re 70 but your role is replaced by AI in your 50s, what happens then? We have to prepare for that possibility now — and that starts by helping people get mortgage-free sooner.”
As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.