Rising house prices and low wage growth have pushed up demand for longer-term mortgages, say brokers.
A poll of brokers and lenders by the Intermediary Mortgage Lenders Association (IMLA) has found that 69% have seen an increase in demand for 35-year home loans, with 13% seeing a “substantial” increase in the first half of this year.
More than three-quarters of brokers (77%) and 74% of lenders said the increase in demand for 35-year term mortgages was an “inevitable consequence” of low wage growth and rising house prices, while 16% feared such a long-term length could limit people’s capacity to save for retirement.
Peter Williams, executive director of IMLA, said: “With many borrowers struggling to make home ownership a reality, it is recognised that the growing recourse to longer-term mortgages could impact upon people’s capacity to save for retirement, albeit this is offset to a degree by the purchase of a property asset.
“In order to prevent retirement saving and home ownership becoming mutually exclusive, government and policymakers have a responsibility to tackle the root of the chronic supply/demand crisis facing the UK.
“Theresa May’s housing summit at No 10 is recognition of that, and working in tandem with the industry, we would hope the Government can move forward to improve housing supply and the life prospects of generation rent.”