How Do You Feel About 40 Year Mortgages?

How Do You Feel About 40 Year Mortgages?


After the financial crash of 2008, first time buyers would have been hoping the time had finally come when they could afford to get on the housing ladder. Sure enough, house prices did fall in this time, but not for long.

As they started to plummet and credit dried up, interest rates were lowered to historic levels and have remained that way ever since. This meant that many homeowners could afford to sit on their low monthly mortgage payments and not sell their home.

On top of this, new buyers found that they could borrow much more than they could previously, as interest rates were now so low. All of this combined to stabalise UK house prices and even push them back up.

After a few years, though, it became apparent that even record low interest rates were not going to be enough to stop the rot in UK house prices.

Enter Help to Buy

By 2012, house prices were again coming under pressure.

So, in the following year, the government introduced the Help to Buy Scheme.

This scheme again allowed buyers to effectively borrow more than they could afford in the past, in order to get onto the housing ladder.

With Help to Buy, the Government agreed to lend up to 20% of the cost of a new build home. Buyers now only needed a 5% cash deposit in order to secure a 75% mortgage, giving some relief to the problem of lenders demanding high deposits after the crash.

This manufactured another temporary boost to UK house prices which lasted a good few years. Until very recently, in fact.

Where Are We Now?

Now, in 2019, it appears that house prices are again coming under renewed pressure.

But with interest rates already at record lows and the Help to Buy scheme no longer sustaining the market, could the house price party soon be coming to an abrupt end?

Might first time buyers finally be able to buy a home at an affordable and sustainable price?

Enter the 40 Year Mortgage

It seems that mortgage lenders are now taking matters into their own hands to throw the UK housing market one more lifeline.

This week, Santander increased the maximum term on mortgage loans to offer borrowers a mortgage of up to 40 years in length. Apparently, around a half of potential borrowers would consider a mortgage term of 40 years, or perhaps more.

The average age of UK first-time buyers currently sits at around 30 years old. This would mean that if 40 year mortgages were to become commonplace, most people wouldn’t actually own their home until they were 70 at least!  

Would You Consider a 40 Year Mortgage?

So, how do you feel about 40 year mortgages?

Are they just a last ditch effort to prop up house prices in the short term, enabling borrowers to fit affordability criteria where they previously couldn’t?

Or, are longer term mortgages a look into a quite depressing future?

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